Volunteers should use the following procedures to enter pensions for retired public safety officers who can deduct medical insurance costs from their gross pension amount.Payments for coverage must be made from the pension to the insurance company.
With an entry in the 1099-R Box 2 (Taxable amount), manually subtract the PSO adjustment from the value and enter the result in Box 2.
With no entry in the 1099-R Box 2, determine the taxable amount using the Bogart Simplified Method Worksheet, subtract the PSO adjustment and enter in Box 2. (You may want to print out the Bogart summary at the bottom of the Worksheet for future reference.)
Remember to check the Retired Public Safety Officer box on the bottom of the 1099-R NonTaxable Income screen. See page D-25 of the NTTC modified version of Pub 4012.