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Retired Public Safety Officer Insurance deduction

Forum|Forum|3 years ago
February 2, 2023
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I am a retired Public Safety Officer.

I pay 10% of my health insurance premium. That amount is deducted from my monthly pension check. The pension coordinator gives it to my (previous) employer and the employer pays for the insurance.

The publication says the pension coordinator must pay it directly to the insurance provider. Does this still count?

Can I deduct the 10%?

Best answer by SharonD007

IRS Pub 575states that “The distribution must be made directly from the plan to the insurance provider”. The federal Pension Protection Act of 2006 contains a provision permitting eligible, retired public safety officers to exclude up to $3,000 for qualified health insurance premiums paid by them from their gross taxable income each year, as long as the premiums are deducted from their retirement benefit.

Based on the information that you provided, the premium that is withheld from your retirement distribution and forwarded to your ex-employer who pays for your healthcare qualifies as an exclusion up to $3,000.

AmyC

Employee

It depends. A tax free distribution does not qualify while a taxable one does qualify as a medical expense.

Publication 502, Medical and Dental Expenses states:

Retired public safety officers. If you are a retired public safety officer, don't include as medical expenses any health or long-term care insurance premiums that you elected to have paid with tax-free distributions from a retirement plan. This applies only to distributions that would otherwise be included in income.

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S

Shadow21912Author

So, you believe that to be the deciding factor? If the payments are pre-tax they (obviously) would not be deductible, but if they are post tax I can deduct them?

SharonD007

If you are asking "can you deduct the medical payments that were deducted from your monthly retirement pay and paid directly to your insurance carrier for your health insurance on your Schedule A as a medical expense", the answer is no but you can exclude that amount up to $3,000 from your taxable income. Please see the instructions below to ensure that the eligible amount withheld will be excluded from your taxable income:

Launch TurboTax and type in Form 1099-R by the magnify glass in the search panel
Select Jump to 1099-R
Add your 1099-R or edit the 1099-R that had your health insurance deducted
Go through the questions and make sure to answer Yes to “this money came from employment as a Public Safety Officer (PSO)”
Enter Yes to “money was taken out to pay for health insurance”
Enter the amount of your pension that was paid directly to the plan administrator for health insurance.

If you are using TurboTax Desktop, you can select Forms at the top of the page, scroll down on the left and highlight 1040. Line 5a will show the total amount of your pension (there will also be “PSO” beside it). Line 5b will show the taxable amount. Up to $3000 will be subtracted from your taxable amount (which is excluded from your taxable income) for the health insurance premiums that the plan administrator paid directly to your health insurance carrier.

If you are using TurboTax online, you must pay for TurboTax before you can view the forms. Select Tax Tools from the menu on the left, With the Tax Tools menu open, you can then:

Preview your entire return: Select Print Center and then Print, save, or preview this year's return
View only your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu.

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SharonD007Answer

IRS Pub 575states that “The distribution must be made directly from the plan to the insurance provider”. The federal Pension Protection Act of 2006 contains a provision permitting eligible, retired public safety officers to exclude up to $3,000 for qualified health insurance premiums paid by them from their gross taxable income each year, as long as the premiums are deducted from their retirement benefit.

Based on the information that you provided, the premium that is withheld from your retirement distribution and forwarded to your ex-employer who pays for your healthcare qualifies as an exclusion up to $3,000.

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O

ohv698

CALPERS pays my medical insurance premium. Can I deduct (up to $3k) LTC, dental and vision insurance premiums that are paid directly out of my pension? I am retired PSO.

M

MinhT1

Yes, you can elect to exclude from income up to $3,000 of premiums for accident or health insurance or long-term care insurance made from a eligible retirement plan.

Please note that the amount excluded from income cannot be used to claim a medical expense deduction.

Please read this IRS document for more information.

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R

RetFFTurp

I am a retired FF and pay all of my Health Insurance Premiums. How can I self-designate and claim/deduct the $3,000 from my taxable income?

B

BillM223

First, you must have taxable income from a pension. No, the pension administrator no longer has to pay the premiums, but the $3,000 exclusion is counted against taxable pension income only.

So when you enter the 1099-R to add the pension income to your return, in the screens right after you enter the 1099-R data, there will be a screen that asks if you had been a public safety officer. You answer YES and then you will be asked how much did you pay towards the insurance premium (max of $3k).

This exclusion will appear in the difference between line 5a and 5b. In addition, the letters PSO will appear on line 5a.

If you do not have any taxable pension income, then you cannot get the $3k health insurance premium deduction for public safety officers.

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