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Retirement tax questions
I'm just confused by it all. Page 28 of the 2023 1040 instructions, column one under "Insurance premiums for Retired PSO states "The distribution must be from the plan maintained by the employer from which you retired as a public safety officer." For me, that is Ohio Police and Fire.
Continuing, "The distribution can be made to you to pay the provider of the health care plan..." For me, I used my distributions in 2023 to cover $4000.00 of health care plan costs.
Columns two: If you are retired on disability and reporting your disability pension on line 1h, include only taxable amount on that line and enter PSO and the amount excluded on the dotted line next to line 1h. I take that to mean, for me, line 1h should be ZERO, PSO, and ($3000). The paragraph above this I quoted states "...reduce the otherwise taxable amount on your pension or annuity by the amount excluded. The amount shown in box 2a of the 1099-R doesn't reflect the exclusion. Report your total distributions on line 5a and the taxable amount on 5b. Enter PSO next to line 5b.
I have almost $80k of taxable income and the city taxed 16K of it. I have taxable income against which to take the deduction even if my disability 1099-R has a ZERO taxable amount. My comprehension after reading this now 10 times is that I should reduce my $40K disability amount to $37K when I input the 1099-R on Turbotax. Problem is the program puts that amount on line 5 and not line 1 as the 1040 instructions specify. Hence, the issue. Nowhere does it state you cannot take the deduction if you have a tax-free disability pension. Thanks...