Thanks so much for your input. Your suggestions led me to do more research, and I finally found an example from the Kentucky Public Pensions Authority that gave an example for a state retiree. It showed that a government pension first is reduced by the percentage of service months earned before Jan 1, 1998, and then what is left is reduced by the $31110 pension exclusion available to all retirees. The Instructions for Schedule P and the Schedule P flowchart certainly could have stated this more explicitly. The heading “Other Retirement Income” for Part II led me to believe that it was only for adding in additional retirement income that wasn’t eligible for a government retiree's larger exclusion, as was calculated in Part 1b. Again, thanks for your feedback.
