I'm trying to apply the following: "as a Public Safety Officer (PSO) - you can exclude up to $3000 of your federal annuity income from federal taxes. any ideas for this?

[tommyc3po]

My accountant was able to do this for me last year, but I'm trying to do this myself in Tubotax.  I thought the question came up, but I can't find it again and it doesn't look like it applied anything.

[AnnetteB6 · Accepted solution]

The question will come up after you have entered your Form 1099-R.  After you indicate that you are a retired PSO, then you must indicate the amount of your distribution that was used to pay for health insurance.  The exclusion of up to $3000 is based on the amount used to pay health insurance, it is not a general exclusion.  

[Booth212]

If I qualify for the PSO $3000 deduction and I check the PSO box, does the software automatically reduce my gross amount or do I enter a $3000 less gross amount that is posted on my 1099-R?

Thank you.

[Critter-3]

Enter the 1099-R as printed ... let the program do the deduction for you. 

[dmertz]

It's necessary to do as Critter-3 explained because when taking the (up to) $3,000 exemption TurboTax must place the "PSO" notation next to line 5b of Form 1040, otherwise the IRS will claim that you underreported your income.

[Booth212]

Thank you Critter-3!