Pension Subtraction Modification for Retired Public Safety

In 2017 Governor Hogan signed the bill passed by the state legislature to provide for a $15,000.00 Pension Subtraction Modification for Retired Law Enforcement, Fire, Rescue or Emergency Services Personnel starting at age 55. Information can be located in the 2017 Maryland State and Local Tax Forms Instructions booklet published by the Comptroller of Maryland, specifically, instruction #13, Subtraction from Income, section rr, pages 9 and 10.

PENSION EXCLUSION FOR RETIRED LAW ENFORCEMENT OFFICER OR FIRE, RESCUE, OR EMERGENCY SERVICES PERSONNEL. Note: An individual taxpayer may not claim BOTH the standard Pension Exclusion and the Pension Exclusion for Retired Law Enforcement Officer or Fire, Rescue, or Emergency Services Personnel. If you are 65 or older on the last day of the calendar year, you are totally disabled, or your spouse is totally disabled, and you have received qualified pension income, you should complete the Pension Exclusion Computation Worksheet (13A) regardless of your prior work history. It is permissible for one spouse to claim the standard Pension Exclusion and the other spouse to claim the Pension Exclusion for Retired Law Enforcement Officer or Fire, Rescue, or Emergency Services Personnel if each spouse meets the applicable required criteria. If you meet the below criteria, use the Pension Exclusion Worksheet (13E) to calculate your eligible pension exclusion:

  1. You were 55 or over on the last day of the tax year, AND b. You were not 65 or older, or totally disabled, or have a spouse who is totally disabled, AND c. You included on your federal return taxable income received as a pension, annuity or endowment from an “employee retirement system” qualified under Section 401(a), 403 or 457(b) of the Internal Revenue Code, AND d. The retirement income is attributable to your service as a law enforcement officer or fire, rescue, or emergency services personnel of the United States, the State of Maryland, or a political subdivision of Maryland. Each spouse who meets the above requirements may be entitled to the exclusion. If each spouse is eligible, complete a separate column on the RETIRED LAW ENFORCEMENT OFFICER OR FIRE, RESCUE, OR EMERGENCY SERVICES PERSONNEL PENSION EXCLUSION COMPUTATION WORKSHEET (13E). Combine your allowable exclusions from line 8 of the worksheet and enter the total amount on line rr, Form 502SU.

Each member is encouraged to consult with their individual tax preparer to determine how these provisions apply.

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