if you're retired law enforcement or firefighter are you getting your $33,000 a year tax deduction no idea what I'm talking about stick around I'm going to put some cash in your pocket welcome back fursians my name is Chris Barfield I'm with Barfield financial.com go on that website scroll down on the homepage enter your email and get the free newsletter that comes out every month to learn all about fur stuff today we're going to be talking about the $3,000 Public Safety Officer deduction this should be something that is well known by everyone that retires unfortunately in my experience it's not a lot of people don't know about this which is interesting because typically in law enforcement we're trying to game the system any way we can here's a benefit a lot of people are leaving on the table what am I talking about if you are retired if you're still working this does not apply to you yet but if you are a retired Public Safety Officer you get to take $33,000 a year off of your tax return every single year so let's dive into this a little bit Public Safety Officer what does that mean who is a public safety officer that's IRS term for pretty much any type of police fire or medic okay so it doesn't necessarily have to be Federal it could be State local City whatever so if you are in law enforcement of any kind you're a deputy sheriff you're a city police officer you're a chaplain for the County Police that counts as well um and then of course all of the feds so FBI agent DEA agent border patrol uh Customs Deputy Marshals Bop uh Pentagon police all of that stuff Capital police all any type of law enforcement counts fire of course Federal firefighters that's who I'm primarily talking to but if you stumble on this video and you're a County fire or city fire you qualify for this as well this is not just a furs or a federal benefit this is all public safety and then of course Medics any type of paramedic ambulance uh you know responder any of that sort of thing I don't think there's too many of those in the federal system but if there happens to be one you're watching you count as well so pretty much anyone that would respond to a 911 call somebody calls 911 and you respond you're a public safety officer in the federal system if you have arrest of powers or you guard something if you have a badge and a gun you are a law enforcement you count as Public Safety fire uh if you're a uh wildland firefighter or a structural firefighter if you're a DOD or you know you're a firefighter for example at uh Naval Air Station Pensacola uh you would count you would count uh under the public safety so what do you get for this $33,000 deducted on your tax return every year for your fhb premiums or your health insurance premiums if you're not under FB for example you postal employees that are switching over to the uh what is it P pshb if you're a Postal Inspector you're under Public Safety um so even though you're not technically under FB if you're under the new system you qualify as well any of you state and local if you have your own whatever type of insurance you have you qualify also so as long as your premiums the cost of this is not MediCal expense we're not talking about you know you go to the doctor and we're talking about your actual premiums the cost of your blue Cross Blue Shield say you can deduct up to $33,000 per person on your tax return each year I'm going to show you exactly how to do that in a minute uh your premium that you pay your insurance premiums has to be more than $3,000 for you to get the full three three grand otherwise you get up to the 3,000 okay so um if you're a single person and you're health insurance for the year is $2,800 then you would be able to claim $2,800 not the 3,000 if your health insurance is 5,000 a year then you would be able to claim the full 3,000 if you are married to another Public Safety Officer then you can both claim the $3,000 for example my wife is retired FBI agent I'm retired Deputy US Marshall to together we're allotted $6,000 a year on our tax return that we can deduct now our health insurance premiums are only about 5800 uh because we're in a high deductible health plan so we don't get the full 6,000 but at least we get to claim everything that we uh you know all the expense that we incur for our health insurance if our health insurance was $10,000 let's say we would be limited to the $6,000 now one caveat if you're talking to your CP about this and they say or they start going down this road where there is a a tax concept where you can have medical expense if they exceed 7 and a half% of your adjusted gross income and you itemize then you can you know deduct all of the we're not talking about that this is completely separate from that this has nothing to do with that deduction in this case you get to take claim this whether whether you itemize or take the standard deduction so these days a lot more people are taking the standard deduction under the new tax rules so you still get to claim this you may think okay Chris this sounds a little bit sketchy how exactly do I claim this let's go right here let's let's go to chapter and verse right you guys don't want to just take somebody's word for it let's look up the actual authoritative literature let's go to the Googles and we will type in IRS publication 721 all right you guys may not know this but the IRS has our best interest at heart always they are looking out for us and in their nonstop efforts to spread cheer and Goodwill throughout the land they create uh Publications these little booklets that are for us uh different tax things that you know information that can expand that you can go and research they make one just for US federal employees it is called IRS publication 721 tax guide to us civil service retirement benefits so if you're looking for information on researching particular topics regarding the fur system or csrs for that matter that's uh it's on here talks about our tsp talks about Survivor annuities talks about all kinds of different things that we will cover in future videos but for our purposes today it does cover the public safety officer so we're going to come down here rules for retirees talk about choosing survivor benefits uh when we come all the way down here pass the tsp pass the rollover rules we talked about rollovers in the last um video distributions used to pay insurance premiums for Public Safety officers so if you're a retired Public Safety Officer and then it lists some of the things that I've already talked about uh you can read this I don't want to read the whole thing to you talks about the lesser of the amount of the insurance premiums or your $3,000 come down here to the important part how to report this this is what your CPA is going to want to know if you're educating your CPA because he doesn't know anything about this this is what you're going to point him to you're basically going to report your total distributions on line 5A so what that means is this let's say you you get a check from OPM every month and then at the end of the year your $199 they uh you know they paid you let's say $50,000 for the year so you would report $50,000 on a line 5A and then report the taxable amount on line 5B so what you're going to do it's literally as simple as this if they are paying you 50,000 you deduct your 3,000 and you're going to claim $47,000 of taxable income it's really that easy so technically this is not a deduction this is if you want to split hairs it's a reduction it's a reduction in your in your in your income your taxable income so that's why you can get this whether you itemize or you take the standard dedu uction this is also if you're familiar with the term above the line deduction that's you don't have to know that term but if you're familiar with it this is one of those so you're literally going to just claim $3,000 less or $6,000 less or whatever it is that you're eligible for and then they give you some other little tip here you write you literally write in PSO on the line so that's indicating to them that you qualif ify for this extra deduction and that's why the amount of money that you received doesn't match the amount of money that you're claiming because you're allowed to claim less okay hopefully that makes sense if you guys have use Turbo Tax this I get this question all the time Turbo Tax will walk you through this assuming you answer the questions correctly if you use a CPA just make sure that your CPA knows about this I get um questions all the time we just tax season just passed I was getting a lot of questions where people are like my CPA doesn't know about this so what we did um what is easy I'm going to put this link in the uh description but if you go to my website Barfield financial.com you go to the article sections you will scroll down until you see the public safety officer deduction explained I go through this in great detail the easiest thing for you to do is send this link to your CPA he'll have at the bottom I have all of this resources all these resources here this law passed in 2006 I've got the IRS code I've got a whole bunch of updated laws uh and so forth okay so I'll put that um Link in the description you guys can read it to your heart's content if you want to you know review anything that I've talked about today or you want to send it to your CPA if you have been retired for a while and this is the first time that you've heard about this you do have the option to go back and file what's called amended returns you've already filed your tax returns at least I hope you have uh but you can go back and you can file amended returns meaning like hey I messed up I didn't claim this deduction and if you do and you go back and file that for a few years you'll get some some money back all right so that might be something that you want to pursue with your CPA again this is for retirees only if you are still working you don't have to worry about this because all of your health insurance premiums are already coming out pre-tax every paycheck they're fully tax deductible so you don't have to worry about that when you retire that benefit ends and so this is a sort of an artificial way to make up for it for you Public Safety officers um read the article send me questions if you have any but other than that please spread the word again all of you federal agents law enforcement fire Public Safety officers of any kind federal state and local you should be taking this every single year if you're retired had somebody recently one last thing had somebody recently email me their CPA said um it's you you're there was two ATF agents that were mared Mar and the CPA said well all of the health insurance premiums is coming out of one person's uh you know retirement check it was coming out as a deduction so only one person can take it that is not true the new law that passed it doesn't even have to come out you could actually pay out of pocket but you're both eligible for that if it's covering two Law Enforcement Officers agents whatever fire you're both entitled to that okay read the law read all this stuff and you'll know it all right thanks guys this is another video in the series everybody wanted to have these things so I'm going to keep doing them as long as you guys appreciate them so uh give me some feedback in the comments let me know if you want me to continue with these uh let me know if you didn't know about this and if you go and file some amended returns let us know how that shakes out you should be getting some money back all right until next time you guys take care of each other and feed your tsp [Music]