501(c)(18) Contributions

[Chowdahead]

I have a police officer as a client and he made almost $80K, single, no dependents. Did his return with the usual police deductions on Schedule A.

He then went home and got on HRblock.com and entered his info in there and determined that he could have cliamied more deductions and gotten more money. He also wants to claim the medical expenses of his children who live with his ex-wife and who he cannot claim.

I looked up the medical expenses in the 1040 Express Answers and it appears he can claim medical expensives for the kid. But I told him they need to be over 7 1/2 % of his AGI to even begin helping him. He said he would look into it.

He allowed me to go into hrblock.com and print his "proposed return", and I noticed that on 1040 Line 36m is printed the item "501©(18)..... $4524". This is adjusted right off his income.

I could not find this amount on any of his W-2 or any of the paperwork he gave me. He says it's contributions to his employee pension with the city. It's not in Box 12a of his W-2., or anywhere on the W-2.

This contributed signficantly to the increase in his proposed "refund" on hrblock.com because it signficantly reduces his taxable income. I also find it odd that it's not listed a box on the 1040.. it's simply on the dotted line. I have never seen this in ATX.

Is this a valid deduction?

[jainen]

>>1040 Line 36<<

Read the instructions to this line at http://www.irs.gov/p...s-pdf/i1040.pdf.

But he probably has it wrong since 501( c)(18)(D) is a rare elective salary deferral through a labor union instead of the employer. He must have entered it with Code H in Box 12 of the W-2, misunderstanding the on-line software.

Government workers typically have a 457 plan. There is no Box 12 code for 457 plans, but Box 1 taxable wages should be that much less compared to Box 3 SS wages. If this is the case, you can show him that he is already taking the deduction. (Note that without a code it can't automatically carry to the Retirement Savers Credit.)