Retirement Benefits Deduction for Qualified Retirement Benefits
You may be able to deduct some of the qualifying retirement benefits and annuities you receive.
The Idaho Retirement Benefits Deduction has a two-part qualification. You must qualify for both parts to receive this deduction.
Part One – Age, Disability and Marital/Filing Status
The recipients must be at least age 65 or be classified as disabled and be at least age 62.
The following individuals are classified as disabled:
• An individual recognized as disabled by the Social Security Administration, the Railroad Retirement Board or the Office of Management and Budget
• A veteran of a U.S. war with a service-connected disability rating of 10% or more
• A veteran of a U.S. war with a nonservice-connected disability pension
• A person who has a physician-certified permanent disability with no expectation of improvement If you’re married, you can’t claim this deduction if you file separately.
If you’re an unremarried widow or widower of a pensioner and receive qualifying survivor benefits, you may be eligible to claim the retirement benefit deduction if you meet the age/disability requirements.
Part Two – Qualified Retirement Benefits
The recipients must meet the requirements in Part One and your qualified retirement benefits must be one of the following:
• Civil Service Employees: Retirement annuities paid by the United States of America Civil Service Retirement System (CSRS), the Foreign Service Retirement and Disability System (FSRDS) or the offset programs of these two systems. To qualify for the deduction, the employee must have established eligibility before 1984. Retirement annuities paid to a retired federal employee under the Federal Employees Retirement System (FERS) don’t qualify for the deduction. If you received a CSA-1099, you can tell if your benefits are paid under the CSRS or FERS by looking at the first digit of the account number shown on your CSA-1099. If the first digit is 7, the benefits are paid out of FERS and don’t qualify. If the first digit is 8, look at your Notice of Annuity Adjustment from the Office of Personnel Management. The notice shows how much of your benefits are paid from CSRS and how much are paid from FERS. Only the portion paid from CSRS qualifies for this deduction. If the first digit is 0, 1, 2, 3 or 4, the benefits are paid out of CSRS.
• Idaho Firefighters: Retirement benefits paid by the Public Employee Retirement System of Idaho (PERSI) relating to the Firemen’s Retirement Fund. If you received a 1099R and your account number includes the FRF (Firemen’s Retirement Fund) designation, your benefits may qualify for the deduction. Benefits paid out of the PERSI Base Plan don’t qualify for the deduction.
• Police Officers of an Idaho City: Retirement benefits paid from the Policemen’s Retirement Fund that no longer admits new members and, on January 1, 2012, was administered by an Idaho city or PERSI. Also, benefits paid by PERSI relating to Idaho police officer employment not included in the federal Social Security retirement system. For example, benefits paid out of the city police retirement funds for the cities of Coeur d’Alene, Lewiston and Pocatello may qualify for the deduction. Similarly, benefits paid by PERSI relating to the old Idaho Falls Policemen’s Retirement Fund may qualify for the deduction. If you received a 1099R and your account number includes the IFP (Idaho Falls Police) designation, your benefits may qualify for the deduction. Benefits paid out of the PERSI Base Plan don’t qualify for the deduction.
• Service Members: Retirement benefits paid by the United States to a retired member of the U.S. military. Disability pension paid by the Federal Railroad Retirement Act may not be included on your Form RRB-1099 or RRB-1099-R, if you’re under the minimum retirement age. Instead it may be included on Form 1040 or 1040-SR, line 1 as wages.