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How do I enter my police disability income as non-taxable?

Fotoman1 — Thu, 06 Jun 2019 18:09:37 GMT

I have a workman's compensation injury that resulted in a disability retirement. How do I enter it as not subject to taxes?

First make sure that Box 7 of your 1099-R contains code 3...

IreneS — Thu, 06 Jun 2019 18:09:40 GMT

First make sure that Box 7 of your 1099-R contains code 3 (disability). After you enter the information from your 1099-R, you will see a series of questions. Be sure to indicate that you were a public safety officer.

To enter your 1099-R in TurboTax:

Click on Federal > Wages & Income.
Scroll down to the Retirement Plans and Social Security section and click on the Start/Revisit box next to IRA, 4701(k), Pension Plan Withdrawals (1099-R). [See Screenshot #1, below.]
If you've already entered one (or more) 1099-Rs, you will see a screen Your1099-R Entries. Click on the link Add Another 1099-R. [Screenshot #2]
If you haven't already entered a 1099-R, you will see the screen, Your 1099-R. Click Yes and then Continue.
You can either import your 1099-R or click on the I'll type it in myself box.
If you select to enter the information yourself, continue through the screens, answering the interview questions.

Box 7 is marked Distribution Code 3 but box 2a also shows...

Fotoman1 — Thu, 06 Jun 2019 18:09:41 GMT

Box 7 is marked Distribution Code 3 but box 2a also shows the amount as taxable. What if I was to go to box 35h and exclude it that way?

It should still be excluded on your NY return even if box...

IreneS — Thu, 06 Jun 2019 18:09:43 GMT

It should still be excluded on your NY return even if box 2a shows the amount as taxable. What button did you select on the "Where is This Distribution From?" screen?

Does the amount appear on line 26 of the IT201 (subtractions)? If it doesn't click on line 26 to highlight it and then click on the magnifying glass icon. This will take you to the Pensions/Annuities/IRAs Worksheet. Make sure the "Qualifies for government exclusion" box is marked at the top of the form.

None of these menu items appear on my Federal Tax Return....

Fotoman1 — Thu, 06 Jun 2019 18:09:44 GMT

None of these menu items appear on my Federal Tax Return. I am in a no state tax state so I'm kind of confused about your recommendations.

I'm sorry! I was assuming you were a NY resident, and ap...

IreneS — Thu, 06 Jun 2019 18:09:46 GMT

I'm sorry!  I was assuming you were a NY resident, and apparently you're not.  That explains the issues you're having!
1.  If NY is not your resident state, then on the 1099R, in Box 13 enter NY.  Click Continue.
2.  On the "Select Your State" screen, NY should be checked.  Click Continue.
3.  The next screen should now be "Where is this Distribution From."  You can then select the New York State pension plan you're enrolled in.
4. Your pension should now be excluded from NY tax.

My retirement income is from Connecticut but I am a resid...

Fotoman1 — Thu, 06 Jun 2019 18:09:48 GMT

My retirement income is from Connecticut but I am a resident of Texas, a no state tax state.
I just need to know how to handle the non-taxable disability income on my Federal Tax Return not any state returns.

Okay, Let me clarify this income. It is a disability inc...

Fotoman1 — Thu, 06 Jun 2019 18:09:49 GMT

Okay, Let me clarify this income. It is a disability income received for an on the job injury as a law enforcement officer. As such it is not susceptible to income taxes as it is considered "workman's compensation". How do I enter it into Turbo Tax so that I am not taxed. I am not subject to any State Taxes.

Do not include it in your income unless you deducted medi...

IreneS — Thu, 06 Jun 2019 18:09:50 GMT

Do not include it in your income unless you deducted medical expenses related to the claim. Please see this FAQ:
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/replies/3302455">https://ttlc.intuit.com/replies/3302455</a>

If you are not subject to taxes on your Police Disability...

jayball102 — Thu, 06 Jun 2019 18:09:52 GMT

If you are not subject to taxes on your Police Disability Pension I am confused on filling out the form. I clicked 3 (disabled) on box 7. Do I enter line 1 and 2a? If I enter those it shows that I owe taxes but I am exempt from tax on this disability pension?

Did you ever get this figured out? I'm in a similar situ...

dieselrob — Thu, 06 Jun 2019 18:09:54 GMT

Did you ever get this figured out? I'm in a similar situation now and wondering how to keep the Disability Pension (firefighter) from being federally taxable as income. Thanks!

Yeah, it turned out my employer had the W-2 incorrectly i...

joebrehler — Thu, 06 Jun 2019 18:09:55 GMT

Yeah, it turned out my employer had the W-2 incorrectly issued, as 2a should have been blank. That fixed it, but it also flagged my return for audit due to claiming no taxable income, even though it’s legit. My return is going to be delayed another 60 days while they review. I filed back in Feb.

Yes but this year TT handled it using the form for Standa...

Fotoman1 — Thu, 06 Jun 2019 18:09:57 GMT

Yes but this year TT handled it using the form for Standard Deduction. I just answered the questions it asked and went from there. Last year I had to check box 16 or 16a and add a comment. Make sure you have all your paperwork and submit it with your return.

Thanks!

dieselrob — Thu, 06 Jun 2019 18:09:58 GMT

Thanks!

Re: First make sure that Box 7 of your 1099-R contains code 3...

graylady — Sun, 15 Mar 2020 17:20:32 GMT

My husband reached retirement age by the time he started collecting Disability Retirement (Box 7 contains 3-Disability) as a police officer. We have used TT and never paid Federal Income Tax on it. According to IRS Publication 907 (2019) we don't pay Federal Taxes. TT 2019 keeps counting it as income, even though I select he is of retirment age and a police officer and started collecting it prior to 2018.

How do I get this to be non-Federal taxable?

Re: First make sure that Box 7 of your 1099-R contains code 3...

graylady — Sun, 15 Mar 2020 17:21:56 GMT

I do not see anything that says "IRA, 4701(k), Pension Plan Withdrawals (1099-R). " And there is no screen shot.

Re: First make sure that Box 7 of your 1099-R contains code 3...

DaveF1006 — Mon, 16 Mar 2020 18:38:01 GMT

When the taxpayer is an eligible "retired public safety officer", defined by the IRS as a "law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew", they can elect to exclude up to $3,000 of the distributions they receive from an eligible retirement plan from their taxable income. To be eligible for this exclusion, the funds must be used to pay for accident or health insurance premiums or the premiums associated with a long-term care contract for the taxpayer, their spouse, or their dependents.

To claim this deduction, make sure that you don't check the box stating that this is an IRA. It's not, it's a pension distribution. In the questions regarding the 1099R, the program will ask if your husband was a police officer and if you say Yes, it will ask questions about the Health insurance premium and if it was deducted from the taxable distribution. if so, you will receive up to a $3000 adjustment lowering your taxable distribution.

Lastly, this is a retirement distribution and since he is of retirement age. The distributions are taxable distributions.

Re: First make sure that Box 7 of your 1099-R contains code 3...

dsanger8 — Tue, 18 Jan 2022 18:37:20 GMT

I have a similar question. I receive a police disability pension and am not yet of retirement age. The last 2 years I have used TT and did not pay income taxes on my pension. The IRS is now saying I owe back taxes. Is there a statute or bill that confirms my position?

Re: First make sure that Box 7 of your 1099-R contains code 3...

DMarkM1 — Tue, 18 Jan 2022 19:40:05 GMT

According to IRS Publication 575, you could have deducted up to $3000 from your pension distributions as a retired Public Safety Officer under certain conditions. Below is an extract for your review.

"If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. The premiums can be for coverage for you, your spouse, or dependents. The distribution must be made directly from the plan to the insurance provider. You can exclude from income the smaller of the amount of the insurance premiums or $3,000."

Other than that deduction, the IRS Publication 575 states:

"If you retired on disability, you must generally include in income any disability pension you receive under a plan that is paid for by your employer. You must report your taxable disability payments as wages on Form 1040 or 1040-SR, line 1; or Form 1040-NR, line 1a, until you reach minimum retirement age. Minimum retirement age is generally the age at which you can first receive a pension or annuity if you aren't disabled."

Re: First make sure that Box 7 of your 1099-R contains code 3...

dsanger8 — Tue, 18 Jan 2022 20:58:51 GMT

Thank you for your response. I am aware of the $3000 credit however the wording is for those who "retired" on disability. I was honorably discharged as a police officer prior to my retirement age. I am 47 you and will reach full retirement age at 52. Box 7 on my 1099-R is labeled 3. Any thoughts?