You don't need to edit the the Form 1040 manually. When you enter the necessary information during the 1099-R interview, TurboTax computes the deduction for insurance premiums for retired public safety officers (PSOs). (Click the first screenshot below for reference.)
To be eligible for the deduction, the insurance premiums must be made directly from the plan to the insurance provider. (They'll be included in box 5 of the Form 1099-R). The PSO deduction reduces your taxable income but does not necessarily increase your refund.
Take these steps to calculate the PSO health insurance premiums deduction:
- Answer Yes when asked if you were employed as a public safety officer (PSO). (Click the second screenshot below.)
- Answer Yes when asked if the plan administrator took out money from your pension to pay for health insurance. (Click the third screenshot below.)
- Enter the amount of your pension paid directly for health insurance. (Click the fourth screenshot below.)
After you finish the 1099-R section, you can view the Form 1040 to see verify the deduction was taken on line 16. You'll see "PSO" to the left of line 16a and the taxable amount on line 16b will be reduced by the insurance premiums (up to $3,000). (Click the fifth screenshot below.)
