How using Police Officer (PSO) on line 16 b. How do I deduct Health Insurance Premiums Paid. I over ride line 16b but fed tax owed is not reduced?

[LindaA · Accepted solution]

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.)

[LindaB1993]

Often, the insurance premiums paid are not shown in box 5 on the Form 1099-R.  The program within TurboTax will prompt you to identify your retirement distribution as a Public Safely Officer.  The next screen will ask "Did the Pension Administrator pay for health insurance?".  After you select "Yes", you will enter the amount in the next screen.  This will automatically populate the POS deduction from the Retirement income within TurboTax.

Please view the following link for detailed instructions that outlines the deduction.  Health insurance deduction as a Public Safety Officer

[tlappin]

On the 2020 tax return this is not true.  The questions are not the same as in prior years.  I have been through them at least 5 times after updates.  The PSO does not work for some reason.  Lots of inquiries about this but all from 2019, which I had no problem with.  The questions were there and it worked just fine.  Being doing that for many years.  Now, in order to make sure our taxes are correct we are going to a professional and paying them after I have paid for the Turbo tax.  ??  

[MarilynG1]

@tlappin  Here's screenshots from TurboTax Online that ask about 'public safety officer' and whether 'insurance was paid by pension'.

If you don't see these screens, you may want to delete/re-enter your 1099-R.

Click this link for more info on Public Safety Officer Retirement.

You can see the Health Insurance deduction on the 1099-R Summary, Line 42, and on the Medical Expenses Worksheet, Line 2d. 

[tlappin]

I finally got it to work. I’ve done this for years so I do know what is supposed to happen.  It just was not calculating and I saw a lot of others with the same issue. Although for me it is all good now.  Might have been my internet having a glitch at the wrong time. Who knows but all good. 
thanks for the reply. 

[drsl]

This is the first time I have done a tax return for my brother, a  retired firefighter.  His pension Form 1099-R shows the same amount of distribution in box 1) Gross Distribution and 2a Taxable Amount.  Box 5 Insurance Premiums is blank.  The IRS/SEP/SIMPLE plan box is not checked.  The retirement department sent a letter that explained that they showed the taxable amount the same as the gross distribution because everyone's tax situation is different.  They did provide the total premium amount that was deducted from his pension check.  When I go through TurboTax Deluxe, it asks if medical payments were deducted from my check and paid directly by the plan administrator to the insurance company.  I answer "Yes" and then it prompt for a dollar amount of the premiums paid.  If I enter the correct amount that was deducted from my check and go to the next page it asked if the pension was a qualified plan which it was.  Then is asks if he received pension distributions prior to 2020, which he did (2012).  Then asks if the amount in box 2A was used as the taxable amount.  I answered yes because that is how the Form 1099-R was filled out.  If I go through the federal tax review it tells me there is an error.  What it is doing is doubling the amount I entered for the insurance premiums which turns out to be $3500 ($1750 X 2).  Why is it doing this?   If I go back and leave the box for the amount of premiums paid blank ($0) then it shows up correctly on the tax return by reducing the taxable amount by the amount of the insurance premium actually paid.  What I can't figure out is how it knows what the amount of premiums paid if I don't enter any amount.

If I enter "No" when asked if the amount in box 2A was used as the taxable amount it takes me to a new section with tells me that I must use the "General" of "Simple Method" ??????

I must be answering something wrong on the questions, but I can't figure out what I am doing.

[drsl]

I'm doing this but it then doubles the amount of $1750 and shows $3500 with an a note that the limit that is deductible is $3000.  Why is it doubling it?   If I leave the amount blank ($0) then it appears correctly???

[drsl]

What problems were you having with the PSO deduction?

[drsl]

tlappin

What problems were you having with the PSO health premiums?

[macuser_22]

Is the insurance amount in box 5 on the 1099-R?

If this was not the first year of receiving the pension then whether you use the simplified method or box 2a amount depends on what method was used in 2019 and if there is a non-taxable "basis" in the plan.   You should not change methods year to  year.   You get the information to enter from the 2019 simplified method worksheet.

The general method would not be used for this type of pension.

[tlappin]

I fixed my problem. All good here

[YUMAAJ]

I ENTERED THE AMOUNT BUT NO CHANGE TO MY TAX LIABILITY

[VolvoGirl]

@YUMAAJ  What amount did you enter?  What for?  Please give more details.