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2008 Tax Software

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2008 Tax Software

2008 tax software 18. 2008 tax software   Alimony Table of Contents IntroductionSpouse or former spouse. 2008 tax software Divorce or separation instrument. 2008 tax software Useful Items - You may want to see: General RulesMortgage payments. 2008 tax software Taxes and insurance. 2008 tax software Other payments to a third party. 2008 tax software Instruments Executed After 1984Payments to a third party. 2008 tax software Exception. 2008 tax software Substitute payments. 2008 tax software Specifically designated as child support. 2008 tax software Contingency relating to your child. 2008 tax software Clearly associated with a contingency. 2008 tax software How To Deduct Alimony Paid How To Report Alimony Received Recapture Rule Introduction This chapter discusses the rules that apply if you pay or receive alimony. 2008 tax software It covers the following topics. 2008 tax software What payments are alimony. 2008 tax software What payments are not alimony, such as child support. 2008 tax software How to deduct alimony you paid. 2008 tax software How to report alimony you received as income. 2008 tax software Whether you must recapture the tax benefits of alimony. 2008 tax software Recapture means adding back in your income all or part of a deduction you took in a prior year. 2008 tax software Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. 2008 tax software It does not include voluntary payments that are not made under a divorce or separation instrument. 2008 tax software Alimony is deductible by the payer and must be included in the spouse's or former spouse's income. 2008 tax software Although this chapter is generally written for the payer of the alimony, the recipient can use the information to determine whether an amount received is alimony. 2008 tax software To be alimony, a payment must meet certain requirements. 2008 tax software Different requirements generally apply to payments under instruments executed after 1984 and to payments under instruments executed before 1985. 2008 tax software This chapter discusses the rules for payments under instruments executed after 1984. 2008 tax software If you need the rules for payments under pre-1985 instruments, get and keep a copy of the 2004 version of Publication 504. 2008 tax software That was the last year the information on pre-1985 instruments was included in Publication 504. 2008 tax software Use Table 18-1 in this chapter as a guide to determine whether certain payments are considered alimony. 2008 tax software Definitions. 2008 tax software   The following definitions apply throughout this chapter. 2008 tax software Spouse or former spouse. 2008 tax software   Unless otherwise stated, the term “spouse” includes former spouse. 2008 tax software Divorce or separation instrument. 2008 tax software   The term “divorce or separation instrument” means: A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. 2008 tax software This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement). 2008 tax software Useful Items - You may want to see: Publication 504 Divorced or Separated Individuals General Rules The following rules apply to alimony regardless of when the divorce or separation instrument was executed. 2008 tax software Payments not alimony. 2008 tax software   Not all payments under a divorce or separation instrument are alimony. 2008 tax software Alimony does not include: Child support, Noncash property settlements, Payments that are your spouse's part of community income, as explained under Community Property in Publication 504, Payments to keep up the payer's property, or Use of the payer's property. 2008 tax software Payments to a third party. 2008 tax software   Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. 2008 tax software These include payments for your spouse's medical expenses, housing costs (rent, utilities, etc. 2008 tax software ), taxes, tuition, etc. 2008 tax software The payments are treated as received by your spouse and then paid to the third party. 2008 tax software Life insurance premiums. 2008 tax software   Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy. 2008 tax software Payments for jointly-owned home. 2008 tax software   If your divorce or separation instrument states that you must pay expenses for a home owned by you and your spouse, some of your payments may be alimony. 2008 tax software Mortgage payments. 2008 tax software   If you must pay all the mortgage payments (principal and interest) on a jointly-owned home, and they otherwise qualify as alimony, you can deduct one-half of the total payments as alimony. 2008 tax software If you itemize deductions and the home is a qualified home, you can claim one-half of the interest in figuring your deductible interest. 2008 tax software Your spouse must report one-half of the payments as alimony received. 2008 tax software If your spouse itemizes deductions and the home is a qualified home, he or she can claim one-half of the interest on the mortgage in figuring deductible interest. 2008 tax software Taxes and insurance. 2008 tax software   If you must pay all the real estate taxes or insurance on a home held as tenants in common, you can deduct one-half of these payments as alimony. 2008 tax software Your spouse must report one-half of these payments as alimony received. 2008 tax software If you and your spouse itemize deductions, you can each claim one-half of the real estate taxes and none of the home insurance. 2008 tax software    If your home is held as tenants by the entirety or joint tenants, none of your payments for taxes or insurance are alimony. 2008 tax software But if you itemize deductions, you can claim all of the real estate taxes and none of the home insurance. 2008 tax software Other payments to a third party. 2008 tax software   If you made other third-party payments, see Publication 504 to see whether any part of the payments qualifies as alimony. 2008 tax software Instruments Executed After 1984 The following rules for alimony apply to payments under divorce or separation instruments executed after 1984. 2008 tax software Exception for instruments executed before 1985. 2008 tax software   There are two situations where the rules for instruments executed after 1984 apply to instruments executed before 1985. 2008 tax software A divorce or separation instrument executed before 1985 and then modified after 1984 to specify that the after-1984 rules will apply. 2008 tax software A temporary divorce or separation instrument executed before 1985 and incorporated into, or adopted by, a final decree executed after 1984 that: Changes the amount or period of payment, or Adds or deletes any contingency or condition. 2008 tax software   For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, get the 2004 version of Publication 504 at www. 2008 tax software irs. 2008 tax software gov/pub504. 2008 tax software Example 1. 2008 tax software In November 1984, you and your former spouse executed a written separation agreement. 2008 tax software In February 1985, a decree of divorce was substituted for the written separation agreement. 2008 tax software The decree of divorce did not change the terms for the alimony you pay your former spouse. 2008 tax software The decree of divorce is treated as executed before 1985. 2008 tax software Alimony payments under this decree are not subject to the rules for payments under instruments executed after 1984. 2008 tax software Example 2. 2008 tax software Assume the same facts as in Example 1 except that the decree of divorce changed the amount of the alimony. 2008 tax software In this example, the decree of divorce is not treated as executed before 1985. 2008 tax software The alimony payments are subject to the rules for payments under instruments executed after 1984. 2008 tax software Alimony requirements. 2008 tax software   A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met. 2008 tax software The payment is in cash. 2008 tax software The instrument does not designate the payment as not alimony. 2008 tax software Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. 2008 tax software There is no liability to make any payment (in cash or property) after the death of the recipient spouse. 2008 tax software The payment is not treated as child support. 2008 tax software Each of these requirements is discussed below. 2008 tax software Cash payment requirement. 2008 tax software   Only cash payments, including checks and money orders, qualify as alimony. 2008 tax software The following do not qualify as alimony. 2008 tax software Transfers of services or property (including a debt instrument of a third party or an annuity contract). 2008 tax software Execution of a debt instrument by the payer. 2008 tax software The use of the payer's property. 2008 tax software Payments to a third party. 2008 tax software   Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. 2008 tax software See Payments to a third party under General Rules, earlier. 2008 tax software   Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met. 2008 tax software The payments are in lieu of payments of alimony directly to your spouse. 2008 tax software The written request states that both spouses intend the payments to be treated as alimony. 2008 tax software You receive the written request from your spouse before you file your return for the year you made the payments. 2008 tax software Payments designated as not alimony. 2008 tax software   You and your spouse can designate that otherwise qualifying payments are not alimony. 2008 tax software You do this by including a provision in your divorce or separation instrument that states the payments are not deductible as alimony by you and are excludable from your spouse's income. 2008 tax software For this purpose, any instrument (written statement) signed by both of you that makes this designation and that refers to a previous written separation agreement is treated as a written separation agreement (and therefore a divorce or separation instrument). 2008 tax software If you are subject to temporary support orders, the designation must be made in the original or a later temporary support order. 2008 tax software   Your spouse can exclude the payments from income only if he or she attaches a copy of the instrument designating them as not alimony to his or her return. 2008 tax software The copy must be attached each year the designation applies. 2008 tax software Spouses cannot be members of the same household. 2008 tax software    Payments to your spouse while you are members of the same household are not alimony if you are legally separated under a decree of divorce or separate maintenance. 2008 tax software A home you formerly shared is considered one household, even if you physically separate yourselves in the home. 2008 tax software   You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment. 2008 tax software Exception. 2008 tax software   If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order may qualify as alimony even if you are members of the same household when the payment is made. 2008 tax software Table 18-1. 2008 tax software Alimony Requirements (Instruments Executed After 1984) Payments ARE alimony if all of the following are true: Payments are NOT alimony if any of the following are true: Payments are required by a divorce or separation instrument. 2008 tax software Payments are not required by a divorce or separation instrument. 2008 tax software Payer and recipient spouse do not file a joint return with each other. 2008 tax software Payer and recipient spouse file a joint return with each other. 2008 tax software Payment is in cash (including checks or money orders). 2008 tax software Payment is: Not in cash, A noncash property settlement, Spouse's part of community income, or To keep up the payer's property. 2008 tax software Payment is not designated in the instrument as not alimony. 2008 tax software Payment is designated in the instrument as not alimony. 2008 tax software Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. 2008 tax software Spouses legally separated under a decree of divorce or separate maintenance are members of the same household. 2008 tax software Payments are not required after death of the recipient spouse. 2008 tax software Payments are required after death of the recipient spouse. 2008 tax software Payment is not treated as child support. 2008 tax software Payment is treated as child support. 2008 tax software These payments are deductible by the payer and includible in income by the recipient. 2008 tax software These payments are neither deductible by the payer nor includible in income by the recipient. 2008 tax software Liability for payments after death of recipient spouse. 2008 tax software   If any part of payments you make must continue to be made for any period after your spouse's death, that part of your payments is not alimony, whether made before or after the death. 2008 tax software If all of the payments would continue, then none of the payments made before or after the death are alimony. 2008 tax software   The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law. 2008 tax software Example. 2008 tax software You must pay your former spouse $10,000 in cash each year for 10 years. 2008 tax software Your divorce decree states that the payments will end upon your former spouse's death. 2008 tax software You must also pay your former spouse or your former spouse's estate $20,000 in cash each year for 10 years. 2008 tax software The death of your spouse would not terminate these payments under state law. 2008 tax software The $10,000 annual payments may qualify as alimony. 2008 tax software The $20,000 annual payments that do not end upon your former spouse's death are not alimony. 2008 tax software Substitute payments. 2008 tax software   If you must make any payments in cash or property after your spouse's death as a substitute for continuing otherwise qualifying payments before the death, the otherwise qualifying payments are not alimony. 2008 tax software To the extent that your payments begin, accelerate, or increase because of the death of your spouse, otherwise qualifying payments you made may be treated as payments that were not alimony. 2008 tax software Whether or not such payments will be treated as not alimony depends on all the facts and circumstances. 2008 tax software Example 1. 2008 tax software Under your divorce decree, you must pay your former spouse $30,000 annually. 2008 tax software The payments will stop at the end of 6 years or upon your former spouse's death, if earlier. 2008 tax software Your former spouse has custody of your minor children. 2008 tax software The decree provides that if any child is still a minor at your spouse's death, you must pay $10,000 annually to a trust until the youngest child reaches the age of majority. 2008 tax software The trust income and corpus (principal) are to be used for your children's benefit. 2008 tax software These facts indicate that the payments to be made after your former spouse's death are a substitute for $10,000 of the $30,000 annual payments. 2008 tax software Of each of the $30,000 annual payments, $10,000 is not alimony. 2008 tax software Example 2. 2008 tax software Under your divorce decree, you must pay your former spouse $30,000 annually. 2008 tax software The payments will stop at the end of 15 years or upon your former spouse's death, if earlier. 2008 tax software The decree provides that if your former spouse dies before the end of the 15-year period, you must pay the estate the difference between $450,000 ($30,000 × 15) and the total amount paid up to that time. 2008 tax software For example, if your spouse dies at the end of the tenth year, you must pay the estate $150,000 ($450,000 − $300,000). 2008 tax software These facts indicate that the lump-sum payment to be made after your former spouse's death is a substitute for the full amount of the $30,000 annual payments. 2008 tax software None of the annual payments are alimony. 2008 tax software The result would be the same if the payment required at death were to be discounted by an appropriate interest factor to account for the prepayment. 2008 tax software Child support. 2008 tax software   A payment that is specifically designated as child support or treated as specifically designated as child support under your divorce or separation instrument is not alimony. 2008 tax software The amount of child support may vary over time. 2008 tax software Child support payments are not deductible by the payer and are not taxable to the recipient. 2008 tax software Specifically designated as child support. 2008 tax software   A payment will be treated as specifically designated as child support to the extent that the payment is reduced either: On the happening of a contingency relating to your child, or At a time that can be clearly associated with the contingency. 2008 tax software A payment may be treated as specifically designated as child support even if other separate payments are specifically designated as child support. 2008 tax software Contingency relating to your child. 2008 tax software   A contingency relates to your child if it depends on any event relating to that child. 2008 tax software It does not matter whether the event is certain or likely to occur. 2008 tax software Events relating to your child include the child's: Becoming employed, Dying, Leaving the household, Leaving school, Marrying, or Reaching a specified age or income level. 2008 tax software Clearly associated with a contingency. 2008 tax software   Payments that would otherwise qualify as alimony are presumed to be reduced at a time clearly associated with the happening of a contingency relating to your child only in the following situations. 2008 tax software The payments are to be reduced not more than 6 months before or after the date the child will reach 18, 21, or local age of majority. 2008 tax software The payments are to be reduced on two or more occasions that occur not more than 1 year before or after a different one of your children reaches a certain age from 18 to 24. 2008 tax software This certain age must be the same for each child, but need not be a whole number of years. 2008 tax software In all other situations, reductions in payments are not treated as clearly associated with the happening of a contingency relating to your child. 2008 tax software   Either you or the IRS can overcome the presumption in the two situations above. 2008 tax software This is done by showing that the time at which the payments are to be reduced was determined independently of any contingencies relating to your children. 2008 tax software For example, if you can show that the period of alimony payments is customary in the local jurisdiction, such as a period equal to one-half of the duration of the marriage, you can overcome the presumption and may be able to treat the amount as alimony. 2008 tax software How To Deduct Alimony Paid You can deduct alimony you paid, whether or not you itemize deductions on your return. 2008 tax software You must file Form 1040. 2008 tax software You cannot use Form 1040A or Form 1040EZ. 2008 tax software Enter the amount of alimony you paid on Form 1040, line 31a. 2008 tax software In the space provided on line 31b, enter your spouse's social security number (SSN) or individual taxpayer identification number (ITIN). 2008 tax software If you paid alimony to more than one person, enter the SSN or ITIN of one of the recipients. 2008 tax software Show the SSN or ITIN and amount paid to each other recipient on an attached statement. 2008 tax software Enter your total payments on line 31a. 2008 tax software You must provide your spouse's SSN or ITIN. 2008 tax software If you do not, you may have to pay a $50 penalty and your deduction may be disallowed. 2008 tax software For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. 2008 tax software How To Report Alimony Received Report alimony you received as income on Form 1040, line 11. 2008 tax software You cannot use Form 1040A or Form 1040EZ. 2008 tax software You must give the person who paid the alimony your SSN or ITIN. 2008 tax software If you do not, you may have to pay a $50 penalty. 2008 tax software Recapture Rule If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. 2008 tax software If you are subject to this rule, you have to include in income in the third year part of the alimony payments you previously deducted. 2008 tax software Your spouse can deduct in the third year part of the alimony payments he or she previously included in income. 2008 tax software The 3-year period starts with the first calendar year you make a payment qualifying as alimony under a decree of divorce or separate maintenance or a written separation agreement. 2008 tax software Do not include any time in which payments were being made under temporary support orders. 2008 tax software The second and third years are the next 2 calendar years, whether or not payments are made during those years. 2008 tax software The reasons for a reduction or end of alimony payments that can require a recapture include: A change in your divorce or separation instrument, A failure to make timely payments, A reduction in your ability to provide support, or A reduction in your spouse's support needs. 2008 tax software When to apply the recapture rule. 2008 tax software   You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year. 2008 tax software   When you figure a decrease in alimony, do not include the following amounts. 2008 tax software Payments made under a temporary support order. 2008 tax software Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income from a business or property, or from compensation for employment or self-employment. 2008 tax software Payments that decrease because of the death of either spouse or the remarriage of the spouse receiving the payments before the end of the third year. 2008 tax software Figuring the recapture. 2008 tax software   You can use Worksheet 1 in Publication 504 to figure recaptured alimony. 2008 tax software Including the recapture in income. 2008 tax software   If you must include a recapture amount in income, show it on Form 1040, line 11 (“Alimony received”). 2008 tax software Cross out “received” and enter “recapture. 2008 tax software ” On the dotted line next to the amount, enter your spouse's last name and SSN or ITIN. 2008 tax software Deducting the recapture. 2008 tax software   If you can deduct a recapture amount, show it on Form 1040, line 31a (“Alimony paid”). 2008 tax software Cross out “paid” and enter “recapture. 2008 tax software ” In the space provided, enter your spouse's SSN or ITIN. 2008 tax software Prev  Up  Next   Home   More Online Publications
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Responsible Parties and Nominees

Responsible Parties

All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the “responsible party,” controls, manages, or directs the applicant entity and the disposition of its funds and assets. If there is more than one responsible party, the entity may list whichever party the entity wants the IRS to recognize as the responsible party. 

According to the Instructions for the current revision of the application, the “responsible party” is defined as follows:

For entities with shares or interests traded on a public exchange, or which are registered with the Securities and Exchange Commission, “responsible party” is (a) the principal officer, if the business is a corporation, (b) a general partner, if a partnership, (c) the owner of an entity that is disregarded as separate from its owner (disregarded entities owned by a corporation enter the corporation’s name and EIN), or (d) a grantor, owner, or trustor if a trust.

For all other entities, “responsible party” is  the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets. The ability to fund the entity or the entitlement to the property of the entity alone, however, without any corresponding authority to control, manage, or direct the entity (such as in the case of a minor child beneficiary), does not cause the individual to be a responsible party.

Nominees

A “nominee” is someone who is given limited authority to act on behalf of an entity, usually for a limited period of time, and usually during the formation of the entity.  The “principal officer, general partner,” etc., as defined by the IRS, is the true “responsible party” for the entity, instead of a nominee. The “responsible party” is the individual or entity that controls, manages, or directs the entity and the disposition of the entity’s funds and assets, unlike a nominee, who is given little or no authority over the entity’s assets. 

The Internal Revenue Service has become aware that nominee individuals are being listed as principal officers, general partners, grantors, owners, and trustors in the Employer Identification Number (EIN) application process. A nominee is not one of these people. Rather, nominees are temporarily authorized to act on behalf of entities during the formation process. The use of nominees in the EIN application process prevents the IRS from gathering appropriate information on entity ownership, and has been found to facilitate tax non-compliance by entities and their owners.

The IRS does not authorize the use of nominees to obtain EINs. All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the “responsible party,” controls, manages, or directs the applicant entity and the disposition of its funds and assets.

To properly submit a Form SS-4, the form and authorization should include the name, Taxpayer Identification Number and signature of the responsible party. Third party designees filing online applications are reminded of their obligation to retain a complete signed copy of the paper Form SS-4 and signed authorization statement for each entity application filed with the IRS. Nominees do not have the authority to authorize third party designees to file Forms SS-4, and should not be listed on the Form SS-4.

If a nominee is used in the state formation process and the true responsible party has not yet been identified, the entity must identify that individual before applying for an EIN.

The IRS will continue to pursue enforcement actions to prevent the misuse of EIN applications.

If you used a nominee for the EIN Application process, visit Correcting Business Information Where a Nominee Was Used to learn how to correct your information.

Page Last Reviewed or Updated: 03-Jan-2014

The 2008 Tax Software

2008 tax software Publication 939 - Main Content Table of Contents General Information Taxation of Periodic PaymentsInvestment in the Contract Expected Return Computation Under the General Rule How To Use Actuarial TablesUnisex Annuity Tables Special Elections Worksheets for Determining Taxable Annuity Actuarial Tables Requesting a Ruling on Taxation of Annuity How To Get Tax HelpLow Income Taxpayer Clinics General Information Some of the terms used in this publication are defined in the following paragraphs. 2008 tax software A pension is generally a series of payments made to you after you retire from work. 2008 tax software Pension payments are made regularly and are for past services with an employer. 2008 tax software An annuity is a series of payments under a contract. 2008 tax software You can buy the contract alone or you can buy it with the help of your employer. 2008 tax software Annuity payments are made regularly for more than one full year. 2008 tax software Note. 2008 tax software Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted. 2008 tax software Types of pensions and annuities. 2008 tax software   Particular types of pensions and annuities include: Fixed period annuities. 2008 tax software You receive definite amounts at regular intervals for a definite length of time. 2008 tax software Annuities for a single life. 2008 tax software You receive definite amounts at regular intervals for life. 2008 tax software The payments end at death. 2008 tax software Joint and survivor annuities. 2008 tax software The first annuitant receives a definite amount at regular intervals for life. 2008 tax software After he or she dies, a second annuitant receives a definite amount at regular intervals for life. 2008 tax software The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. 2008 tax software Variable annuities. 2008 tax software You receive payments that may vary in amount for a definite length of time or for life. 2008 tax software The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds or cost-of-living indexes. 2008 tax software Disability pensions. 2008 tax software You are under minimum retirement age and receive payments because you retired on disability. 2008 tax software If, at the time of your retirement, you were permanently and totally disabled, you may be eligible for the credit for the elderly or the disabled discussed in Publication 524. 2008 tax software If your annuity starting date is after November 18, 1996, the General Rule cannot be used for the following qualified plans. 2008 tax software A qualified employee plan is an employer's stock bonus, pension, or profit-sharing plan that is for the exclusive benefit of employees or their beneficiaries. 2008 tax software This plan must meet Internal Revenue Code requirements. 2008 tax software It qualifies for special tax benefits, including tax deferral for employer contributions and rollover distributions. 2008 tax software However, you must use the General Rule if you were 75 or over and the annuity payments are guaranteed for more than 5 years. 2008 tax software A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. 2008 tax software A tax-sheltered annuity is a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization. 2008 tax software   The General Rule is used to figure the tax treatment of various types of pensions and annuities, including nonqualified employee plans. 2008 tax software A nonqualified employee plan is an employer's plan that does not meet Internal Revenue Code requirements. 2008 tax software It does not qualify for most of the tax benefits of a qualified plan. 2008 tax software Annuity worksheets. 2008 tax software   The worksheets found near the end of the text of this publication may be useful to you in figuring the taxable part of your annuity. 2008 tax software Request for a ruling. 2008 tax software   If you are unable to determine the income tax treatment of your pension or annuity, you may ask the Internal Revenue Service to figure the taxable part of your annuity payments. 2008 tax software This is treated as a request for a ruling. 2008 tax software See Requesting a Ruling on Taxation of Annuity near the end of this publication. 2008 tax software Withholding tax and estimated tax. 2008 tax software   Your pension or annuity is subject to federal income tax withholding unless you choose not to have tax withheld. 2008 tax software If you choose not to have tax withheld from your pension or annuity, or if you do not have enough income tax withheld, you may have to make estimated tax payments. 2008 tax software Taxation of Periodic Payments This section explains how the periodic payments you receive under a pension or annuity plan are taxed under the General Rule. 2008 tax software Periodic payments are amounts paid at regular intervals (such as weekly, monthly, or yearly) for a period of time greater than one year (such as for 15 years or for life). 2008 tax software These payments are also known as amounts received as an annuity. 2008 tax software If you receive an amount from your plan that is a nonperiodic payment (amount not received as an annuity), see Taxation of Nonperiodic Payments in Publication 575. 2008 tax software In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments. 2008 tax software The amount of each payment that is more than the part that represents your net cost is taxable. 2008 tax software Under the General Rule, the part of each annuity payment that represents your net cost is in the same proportion that your investment in the contract is to your expected return. 2008 tax software These terms are explained in the following discussions. 2008 tax software Investment in the Contract In figuring how much of your pension or annuity is taxable under the General Rule, you must figure your investment in the contract. 2008 tax software First, find your net cost of the contract as of the annuity starting date (defined later). 2008 tax software To find this amount, you must first figure the total premiums, contributions, or other amounts paid. 2008 tax software This includes the amounts your employer contributed if you were required to include these amounts in income. 2008 tax software It also includes amounts you actually contributed (except amounts for health and accident benefits and deductible voluntary employee contributions). 2008 tax software From this total cost you subtract: Any refunded premiums, rebates, dividends, or unrepaid loans (any of which were not included in your income) that you received by the later of the annuity starting date or the date on which you received your first payment. 2008 tax software Any additional premiums paid for double indemnity or disability benefits. 2008 tax software Any other tax-free amounts you received under the contract or plan before the later of the dates in (1). 2008 tax software The annuity starting date   is the later of the first day of the first period for which you receive payment under the contract or the date on which the obligation under the contract becomes fixed. 2008 tax software Example. 2008 tax software On January 1 you completed all your payments required under an annuity contract providing for monthly payments starting on August 1, for the period beginning July 1. 2008 tax software The annuity starting date is July 1. 2008 tax software This is the date you use in figuring your investment in the contract and your expected return (discussed later). 2008 tax software Adjustments If any of the following items apply, adjust (add or subtract) your total cost to find your net cost. 2008 tax software Foreign employment. 2008 tax software   If you worked abroad, your cost may include contributions by your employer to the retirement plan, but only if those contributions would be excludible from your gross income had they been paid directly to you as compensation. 2008 tax software The contributions that apply are: Contributions before 1963 by your employer, Contributions after 1962 by your employer if the contributions would be excludible from your gross income (without regard to the foreign earned income exclusion) had they been paid directly to you, or Contributions after 1996 by your employer on your behalf if you performed the services of a foreign missionary (a duly ordained, commissioned, or licensed minister of a church or a lay person) if the contributions would be excludible from your gross income had they been paid directly to you. 2008 tax software Foreign employment contributions while a nonresident alien. 2008 tax software   In determining your cost, special rules apply if you are a U. 2008 tax software S. 2008 tax software citizen or resident alien who received distributions from a plan to which contributions were made while you were a nonresident alien. 2008 tax software Your contributions and your employer's contributions are not included in your cost if the contributions: Were made based on compensation which was for services performed outside the United States which you were a nonresident alien, and Were not subject to income tax under the laws of the United States or any foreign country, but only if the contribution would have been subject to income tax if they had been paid as cash compensation when the services were performed. 2008 tax software Death benefit exclusion. 2008 tax software   If you are the beneficiary of a deceased employee (or former employee), who died before August 21, 1996, you may qualify for a death benefit exclusion of up to $5,000. 2008 tax software The beneficiary of a deceased employee who died after August 20, 1996, will not qualify for the death benefit exclusion. 2008 tax software How to adjust your total cost. 2008 tax software   If you are eligible, treat the amount of any allowable death benefit exclusion as additional cost paid by the employee. 2008 tax software Add it to the cost or unrecovered cost of the annuity at the annuity starting date. 2008 tax software See Example 3 under Computation Under General Rule for an illustration of the adjustment to the cost of the contract. 2008 tax software Net cost. 2008 tax software   Your total cost plus certain adjustments and minus other amounts already recovered before the annuity starting date is your net cost. 2008 tax software This is the unrecovered investment in the contract as of the annuity starting date. 2008 tax software If your annuity starting date is after 1986, this is the maximum amount that you may recover tax free under the contract. 2008 tax software Refund feature. 2008 tax software   Adjustment for the value of the refund feature is only applicable when you report your pension or annuity under the General Rule. 2008 tax software Your annuity contract has a refund feature if: The expected return ( discussed later) of an annuity depends entirely or partly on the life of one or more individuals, The contract provides that payments will be made to a beneficiary or the estate of an annuitant on or after the death of the annuitant if a stated amount or a stated number of payments has not been paid to the annuitant or annuitants before death, and The payments are a refund of the amount you paid for the annuity contract. 2008 tax software   If your annuity has a refund feature, you must reduce your net cost of the contract by the value of the refund feature (figured using Table III or VII at the end of this publication, also see How To Use Actuarial Tables , later) to find the investment in the contract. 2008 tax software Zero value of refund feature. 2008 tax software   For a joint and survivor annuity, the value of the refund feature is zero if: Both annuitants are age 74 or younger, The payments are guaranteed for less than 2½ years, and The survivor's annuity is at least 50% of the first annuitant's annuity. 2008 tax software   For a single-life annuity without survivor benefit, the value of the refund feature is zero if: The payments are guaranteed for less than 2½ years, and The annuitant is: Age 57 or younger (if using the new (unisex) annuity tables), Age 42 or younger (if male and using the old annuity tables), or Age 47 or younger (if female and using the old annuity tables). 2008 tax software   If you do not meet these requirements, you will have to figure the value of the refund feature, as explained in the following discussion. 2008 tax software Examples. 2008 tax software The first example shows how to figure the value of the refund feature when there is only one beneficiary. 2008 tax software Example 2 shows how to figure the value of the refund feature when the contract provides, in addition to a whole life annuity, one or more temporary life annuities for the lives of children. 2008 tax software In both examples, the taxpayer elects to use Tables V through VIII. 2008 tax software If you need the value of the refund feature for a joint and survivor annuity, write to the Internal Revenue Service as explained under Requesting a Ruling on Taxation of Annuity near the end of this publication. 2008 tax software Example 1. 2008 tax software At age 65, Barbara bought for $21,053 an annuity with a refund feature. 2008 tax software She will get $100 a month for life. 2008 tax software Barbara's contract provides that if she does not live long enough to recover the full $21,053, similar payments will be made to her surviving beneficiary until a total of $21,053 has been paid under the contract. 2008 tax software In this case, the contract cost and the total guaranteed return are the same ($21,053). 2008 tax software Barbara's investment in the contract is figured as follows: Net cost $21,053 Amount to be received annually $1,200   Number of years for which payment is guaranteed ($21,053 divided by $1,200) 17. 2008 tax software 54   Rounded to nearest whole number of years 18   Percentage from Actuarial Table VII for age 65 with 18 years of guaranteed payments 15%   Value of the refund feature (rounded to the nearest dollar)—15% of $21,053 3,158 Investment in the contract, adjusted for value of refund feature $17,895       If the total guaranteed return were less than the $21,053 net cost of the contract, Barbara would apply the appropriate percentage from the tables to the lesser amount. 2008 tax software For example, if the contract guaranteed the $100 monthly payments for 17 years to Barbara's estate or beneficiary if she were to die before receiving all the payments for that period, the total guaranteed return would be $20,400 ($100 × 12 × 17 years). 2008 tax software In this case, the value of the refund feature would be $2,856 (14% of $20,400) and Barbara's investment in the contract would be $18,197 ($21,053 minus $2,856) instead of $17,895. 2008 tax software Example 2. 2008 tax software John died while still employed. 2008 tax software His widow, Eleanor, age 48, receives $171 a month for the rest of her life. 2008 tax software John's son, Elmer, age 9, receives $50 a month until he reaches age 18. 2008 tax software John's contributions to the retirement fund totaled $7,559. 2008 tax software 45, with interest on those contributions of $1,602. 2008 tax software 53. 2008 tax software The guarantee or total refund feature of the contract is $9,161. 2008 tax software 98 ($7,559. 2008 tax software 45 plus $1,602. 2008 tax software 53). 2008 tax software The adjustment in the investment in the contract is figured as follows: A) Expected return:*       1) Widow's expected return:         Annual annuity ($171 × 12) $2,052       Multiplied by factor from Table V         (nearest age 48) 34. 2008 tax software 9 $71,614. 2008 tax software 80   2) Child's expected return:         Annual annuity ($50 × 12) $600       Multiplied by factor from         Table VIII (nearest age 9         for term of 9 years) 9. 2008 tax software 0 5,400. 2008 tax software 00   3) Total expected return   $77,014. 2008 tax software 80 B) Adjustment for refund feature:       1) Contributions (net cost) $7,559. 2008 tax software 45   2) Guaranteed amount (contributions of $7,559. 2008 tax software 45 plus interest of $1,602. 2008 tax software 53) $9,161. 2008 tax software 98   3) Minus: Expected return under child's (temporary life) annuity (A(2)) 5,400. 2008 tax software 00   4) Net guaranteed amount $3,761. 2008 tax software 98   5) Multiple from Table VII (nearest age 48 for 2 years duration (recovery of $3,761. 2008 tax software 98 at $171 a month to nearest whole year)) 0%   6) Adjustment required for value of refund feature rounded to the nearest whole dollar  (0% × $3,761. 2008 tax software 98, the smaller of B(3) or B(6)) 0 *Expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 2008 tax software See the discussion of expected return, later in this publication. 2008 tax software Free IRS help. 2008 tax software   If you need to request assistance to figure the value of the refund feature, see Requesting a Ruling on Taxation of Annuity near the end of this publication. 2008 tax software Expected Return Your expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 2008 tax software The following discussions explain how to figure the expected return with each type of annuity. 2008 tax software A person's age, for purposes of figuring the expected return, is the age at the birthday nearest to the annuity starting date. 2008 tax software Fixed period annuity. 2008 tax software   If you will get annuity payments for a fixed number of years, without regard to your life expectancy, you must figure your expected return based on that fixed number of years. 2008 tax software It is the total amount you will get beginning at the annuity starting date. 2008 tax software You will receive specific periodic payments for a definite period of time, such as a fixed number of months (but not less than 13). 2008 tax software To figure your expected return, multiply the fixed number of months for which payments are to be made by the amount of the payment specified for each period. 2008 tax software Single life annuity. 2008 tax software   If you are to get annuity payments for the rest of your life, find your expected return as follows. 2008 tax software You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. 2008 tax software These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later). 2008 tax software   You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. 2008 tax software See Adjustments to Tables I, II, V, VI, and VIA following Table I. 2008 tax software Example. 2008 tax software Henry bought an annuity contract that will give him an annuity of $500 a month for his life. 2008 tax software If at the annuity starting date Henry's nearest birthday is 66, the expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table V, age 66 × 19. 2008 tax software 2 Expected return $115,200 If the payments were to be made to Henry quarterly and the first payment was made one full month after the annuity starting date, Henry would adjust the 19. 2008 tax software 2 multiple by +. 2008 tax software 1. 2008 tax software His expected return would then be $115,800 ($6,000 × 19. 2008 tax software 3). 2008 tax software Annuity for shorter of life or specified period. 2008 tax software   With this type of annuity, you are to get annuity payments either for the rest of your life or until the end of a specified period, whichever period is shorter. 2008 tax software To figure your expected return, multiply the amount of your annual payment by a multiple in Table IV or VIII for temporary life annuities. 2008 tax software Find the proper multiple based on your sex (if using Table IV), your age at the annuity starting date, and the nearest whole number of years in the specified period. 2008 tax software Example. 2008 tax software Harriet purchased an annuity this year that will pay her $200 each month for five years or until she dies, whichever period is shorter. 2008 tax software She was age 65 at her birthday nearest the annuity starting date. 2008 tax software She figures the expected return as follows: Annual payment ($200 × 12 months) $2,400 Multiple shown in Table VIII, age 65, 5-year term × 4. 2008 tax software 9 Expected return $11,760 She uses Table VIII (not Table IV) because all her contributions were made after June 30, 1986. 2008 tax software See Special Elections, later. 2008 tax software Joint and survivor annuities. 2008 tax software   If you have an annuity that pays you a periodic income for life and after your death provides an identical lifetime periodic income to your spouse (or some other person), you figure the expected return based on your combined life expectancies. 2008 tax software To figure the expected return, multiply the annual payment by a multiple in Table II or VI based on your joint life expectancies. 2008 tax software If your payments are made quarterly, semiannually, or annually, you may need to adjust these multiples. 2008 tax software See Adjustments to Tables I, II, V, VI, and VIA following Table I near the end of this publication. 2008 tax software Example. 2008 tax software John bought a joint and survivor annuity providing payments of $500 a month for his life, and, after his death, $500 a month for the remainder of his wife's life. 2008 tax software At John's annuity starting date, his age at his nearest birthday is 70 and his wife's at her nearest birthday is 67. 2008 tax software The expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table VI, ages 67 and 70 × 22. 2008 tax software 0 Expected return $132,000 Different payments to survivor. 2008 tax software   If your contract provides that payments to a survivor annuitant will be different from the amount you receive, you must use a computation which accounts for both the joint lives of the annuitants and the life of the survivor. 2008 tax software Example 1. 2008 tax software Gerald bought a contract providing for payments to him of $500 a month for life and, after his death, payments to his wife, Mary, of $350 a month for life. 2008 tax software If, at the annuity starting date, Gerald's nearest birthday is 70 and Mary's is 67, the expected return under the contract is figured as follows: Combined multiple for Gerald and Mary, ages 70 and 67 (from Table VI)   22. 2008 tax software 0 Multiple for Gerald, age 70 (from Table V)   16. 2008 tax software 0 Difference: Multiple applicable to Mary   6. 2008 tax software 0 Gerald's annual payment ($500 × 12) $6,000   Gerald's multiple 16. 2008 tax software 0   Gerald's expected return   $96,000 Mary's annual payment ($350 × 12) $4,200   Mary's multiple 6. 2008 tax software 0   Mary's expected return   25,200 Total expected return under the contract   $121,200 Example 2. 2008 tax software Your husband died while still employed. 2008 tax software Under the terms of his employer's retirement plan, you are entitled to get an immediate annuity of $400 a month for the rest of your life or until you remarry. 2008 tax software Your daughters, Marie and Jean, are each entitled to immediate temporary life annuities of $150 a month until they reach age 18. 2008 tax software You were 50 years old at the annuity starting date. 2008 tax software Marie was 16 and Jean was 14. 2008 tax software Using the multiples shown in Tables V and VIII at the end of this publication, the total expected return on the annuity starting date is $169,680, figured as follows: Widow, age 50 (multiple from Table V—33. 2008 tax software 1 × $4,800 annual payment) $158,880 Marie, age 16 for 2 years duration (multiple from Table VIII—2. 2008 tax software 0 × $1,800 annual payment) 3,600 Jean, age 14 for 4 years duration (multiple from Table VIII—4. 2008 tax software 0 × $1,800 annual payment) 7,200 Total expected return $169,680 No computation of expected return is made based on your husband's age at the date of death because he died before the annuity starting date. 2008 tax software Computation Under the General Rule Note. 2008 tax software Variable annuities use a different computation for determining the exclusion amounts. 2008 tax software See Variable annuities later. 2008 tax software Under the General Rule, you figure the taxable part of your annuity by using the following steps: Step 1. 2008 tax software   Figure the amount of your investment in the contract, including any adjustments for the refund feature and the death benefit exclusion, if applicable. 2008 tax software See Death benefit exclusion , earlier. 2008 tax software Step 2. 2008 tax software   Figure your expected return. 2008 tax software Step 3. 2008 tax software   Divide Step 1 by Step 2 and round to three decimal places. 2008 tax software This will give you the exclusion percentage. 2008 tax software Step 4. 2008 tax software   Multiply the exclusion percentage by the first regular periodic payment. 2008 tax software The result is the tax-free part of each pension or annuity payment. 2008 tax software   The tax-free part remains the same even if the total payment increases due to variation in the annuity amount such as cost of living increases, or you outlive the life expectancy factor used. 2008 tax software However, if your annuity starting date is after 1986, the total amount of annuity income that is tax free over the years cannot exceed your net cost. 2008 tax software   Each annuitant applies the same exclusion percentage to his or her initial payment called for in the contract. 2008 tax software Step 5. 2008 tax software   Multiply the tax-free part of each payment (step 4) by the number of payments received during the year. 2008 tax software This will give you the tax-free part of the total payment for the year. 2008 tax software    In the first year of your annuity, your first payment or part of your first payment may be for a fraction of the payment period. 2008 tax software This fractional amount is multiplied by your exclusion percentage to get the tax-free part. 2008 tax software Step 6. 2008 tax software   Subtract the tax-free part from the total payment you received. 2008 tax software The rest is the taxable part of your pension or annuity. 2008 tax software Example 1. 2008 tax software You purchased an annuity with an investment in the contract of $10,800. 2008 tax software Under its terms, the annuity will pay you $100 a month for life. 2008 tax software The multiple for your age (age 65) is 20. 2008 tax software 0 as shown in Table V. 2008 tax software Your expected return is $24,000 (20 × 12 × $100). 2008 tax software Your cost of $10,800, divided by your expected return of $24,000, equals 45. 2008 tax software 0%. 2008 tax software This is the percentage you will not have to include in income. 2008 tax software Each year, until your net cost is recovered, $540 (45% of $1,200) will be tax free and you will include $660 ($1,200 − $540) in your income. 2008 tax software If you had received only six payments of $100 ($600) during the year, your exclusion would have been $270 (45% of $100 × 6 payments). 2008 tax software Example 2. 2008 tax software Gerald bought a joint and survivor annuity. 2008 tax software Gerald's investment in the contract is $62,712 and the expected return is $121,200. 2008 tax software The exclusion percentage is 51. 2008 tax software 7% ($62,712 ÷ $121,200). 2008 tax software Gerald will receive $500 a month ($6,000 a year). 2008 tax software Each year, until his net cost is recovered, $3,102 (51. 2008 tax software 7% of his total payments received of $6,000) will be tax free and $2,898 ($6,000 − $3,102) will be included in his income. 2008 tax software If Gerald dies, his wife will receive $350 a month ($4,200 a year). 2008 tax software If Gerald had not recovered all of his net cost before his death, his wife will use the same exclusion percentage (51. 2008 tax software 7%). 2008 tax software Each year, until the entire net cost is recovered, his wife will receive $2,171. 2008 tax software 40 (51. 2008 tax software 7% of her payments received of $4,200) tax free. 2008 tax software She will include $2,028. 2008 tax software 60 ($4,200 − $2,171. 2008 tax software 40) in her income tax return. 2008 tax software Example 3. 2008 tax software Using the same facts as Example 2 under Different payments to survivor, you are to receive an annual annuity of $4,800 until you die or remarry. 2008 tax software Your two daughters each receive annual annuities of $1,800 until they reach age 18. 2008 tax software Your husband contributed $25,576 to the plan. 2008 tax software You are eligible for the $5,000 death benefit exclusion because your husband died before August 21, 1996. 2008 tax software Adjusted Investment in the Contract Contributions $25,576 Plus: Death benefit exclusion 5,000 Adjusted investment in the contract $30,576 The total expected return, as previously figured (in Example 2 under Different payments to survivor), is $169,680. 2008 tax software The exclusion percentage of 18. 2008 tax software 0% ($30,576 ÷ $169,680) applies to the annuity payments you and each of your daughters receive. 2008 tax software Each full year $864 (18. 2008 tax software 0% × $4,800) will be tax free to you, and you must include $3,936 in your income tax return. 2008 tax software Each year, until age 18, $324 (18. 2008 tax software 0% × $1,800) of each of your daughters' payments will be tax free and each must include the balance, $1,476, as income on her own income tax return. 2008 tax software Part-year payments. 2008 tax software   If you receive payments for only part of a year, apply the exclusion percentage to the first regular periodic payment, and multiply the result by the number of payments received during the year. 2008 tax software   If you receive amounts during the year that represent 12 payments, one for each month in that year, and an amount that represents payments for months in a prior year, apply the exclusion percentage to the first regular periodic payment, and multiply the result by the number of payments the amounts received represent. 2008 tax software For instance, if you received amounts during the year that represent the 12 payments for that year plus an amount that represents three payments for a prior year, multiply that amount by the 15 (12 + 3) payments received that the year. 2008 tax software   If you received a fractional payment, follow Step 5, discussed earlier. 2008 tax software This gives you the tax-free part of your total payment. 2008 tax software Example. 2008 tax software On September 28, Mary bought an annuity contract for $22,050 that will give her $125 a month for life, beginning October 30. 2008 tax software The applicable multiple from Table V is 23. 2008 tax software 3 (age 61). 2008 tax software Her expected return is $34,950 ($125 × 12 × 23. 2008 tax software 3). 2008 tax software Mary's investment in the contract of $22,050, divided by her expected return of $34,950, equals 63. 2008 tax software 1%. 2008 tax software Each payment received will consist of 63. 2008 tax software 1% return of cost and 36. 2008 tax software 9% taxable income, until her net cost of the contract is fully recovered. 2008 tax software During the first year, Mary received three payments of $125, or $375, of which $236. 2008 tax software 63 (63. 2008 tax software 1% × $375) is a return of cost. 2008 tax software The remaining $138. 2008 tax software 37 is included in income. 2008 tax software Increase in annuity payments. 2008 tax software   The tax-free amount remains the same as the amount figured at the annuity starting date, even if the payment increases. 2008 tax software All increases in the installment payments are fully taxable. 2008 tax software   However, if your annuity payments are scheduled to increase at a definite date in the future you must figure the expected return for that annuity using the method described in section 1. 2008 tax software 72-5(a)(5) of the regulations. 2008 tax software Example. 2008 tax software Joe's wife died while she was still employed and, as her beneficiary, he began receiving an annuity of $147 per month. 2008 tax software In figuring the taxable part, Joe elects to use Tables V through VIII. 2008 tax software The cost of the contract was $7,938, consisting of the sum of his wife's net contributions, adjusted for any refund feature. 2008 tax software His expected return as of the annuity starting date is $35,280 (age 65, multiple of 20. 2008 tax software 0 × $1,764 annual payment). 2008 tax software The exclusion percentage is $7,938 ÷ $35,280, or 22. 2008 tax software 5%. 2008 tax software During the year he received 11 monthly payments of $147, or $1,617. 2008 tax software Of this amount, 22. 2008 tax software 5% × $147 × 11 ($363. 2008 tax software 83) is tax free as a return of cost and the balance of $1,253. 2008 tax software 17 is taxable. 2008 tax software Later, because of a cost-of-living increase, his annuity payment was increased to $166 per month, or $1,992 a year (12 × $166). 2008 tax software The tax-free part is still only 22. 2008 tax software 5% of the annuity payments as of the annuity starting date (22. 2008 tax software 5% × $147 × 12 = $396. 2008 tax software 90 for a full year). 2008 tax software The increase of $228 ($1,992 − $1,764 (12 × $147)) is fully taxable. 2008 tax software Variable annuities. 2008 tax software   For variable annuity payments, figure the amount of each payment that is tax free by dividing your investment in the contract (adjusted for any refund feature) by the total number of periodic payments you expect to get under the contract. 2008 tax software   If the annuity is for a definite period, you determine the total number of payments by multiplying the number of payments to be made each year by the number of years you will receive payments. 2008 tax software If the annuity is for life, you determine the total number of payments by using a multiple from the appropriate actuarial table. 2008 tax software Example. 2008 tax software Frank purchased a variable annuity at age 65. 2008 tax software The total cost of the contract was $12,000. 2008 tax software The annuity starting date is January 1 of the year of purchase. 2008 tax software His annuity will be paid, starting July 1, in variable annual installments for his life. 2008 tax software The tax-free amount of each payment, until he has recovered his cost of his contract, is: Investment in the contract $12,000 Number of expected annual payments (multiple for age 65 from Table V) 20 Tax-free amount of each payment ($12,000 ÷ 20) $600 If Frank's first payment is $920, he includes only $320 ($920 − $600) in his gross income. 2008 tax software   If the tax-free amount for a year is more than the payments you receive in that year, you may choose, when you receive the next payment, to refigure the tax-free part. 2008 tax software Divide the amount of the periodic tax-free part that is more than the payment you received by the remaining number of payments you expect. 2008 tax software The result is added to the previously figured periodic tax-free part. 2008 tax software The sum is the amount of each future payment that will be tax free. 2008 tax software Example. 2008 tax software Using the facts of the previous example about Frank, assume that after Frank's $920 payment, he received $500 in the following year, and $1,200 in the year after that. 2008 tax software Frank does not pay tax on the $500 (second year) payment because $600 of each annual pension payment is tax free. 2008 tax software Since the $500 payment is less than the $600 annual tax-free amount, he may choose to refigure his tax-free part when he receives his $1,200 (third year) payment, as follows: Amount tax free in second year $600. 2008 tax software 00 Amount received in second year 500. 2008 tax software 00 Difference $100. 2008 tax software 00 Number of remaining payments after the first 2 payments (age 67, from Table V) 18. 2008 tax software 4 Amount to be added to previously determined annual tax-free part ($100 ÷ 18. 2008 tax software 4) $5. 2008 tax software 43 Revised annual tax-free part for third and later years ($600 + $5. 2008 tax software 43) $605. 2008 tax software 43 Amount taxable in third year ($1,200 − $605. 2008 tax software 43) $594. 2008 tax software 57 If you choose to refigure your tax-free amount,   you must file a statement with your income tax return stating that you are refiguring the tax-free amount in accordance with the rules of section 1. 2008 tax software 72–4(d)(3) of the Income Tax Regulations. 2008 tax software The statement must also show the following information: The annuity starting date and your age on that date. 2008 tax software The first day of the first period for which you received an annuity payment in the current year. 2008 tax software Your investment in the contract as originally figured. 2008 tax software The total of all amounts received tax free under the annuity from the annuity starting date through the first day of the first period for which you received an annuity payment in the current tax year. 2008 tax software Exclusion Limits Your annuity starting date determines the total amount of annuity income that you can exclude from income over the years. 2008 tax software Exclusion limited to net cost. 2008 tax software   If your annuity starting date is after 1986, the total amount of annuity income that you can exclude over the years as a return of your cost cannot exceed your net cost (figured without any reduction for a refund feature). 2008 tax software This is the unrecovered investment in the contract as of the annuity starting date. 2008 tax software   If your annuity starting date is after July 1, 1986, any unrecovered net cost at your (or last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. 2008 tax software This deduction is not subject to the 2%-of-adjusted-gross-income limit. 2008 tax software Example 1. 2008 tax software Your annuity starting date is after 1986. 2008 tax software Your total cost is $12,500, and your net cost is $10,000, taking into account certain adjustments. 2008 tax software There is no refund feature. 2008 tax software Your monthly annuity payment is $833. 2008 tax software 33. 2008 tax software Your exclusion ratio is 12% and you exclude $100 a month. 2008 tax software Your exclusion ends after 100 months, when you have excluded your net cost of $10,000. 2008 tax software Thereafter, your annuity payments are fully taxable. 2008 tax software Example 2. 2008 tax software The facts are the same as in Example 1, except that there is a refund feature, and you die after 5 years with no surviving annuitant. 2008 tax software The adjustment for the refund feature is $1,000, so the investment in the contract is $9,000. 2008 tax software The exclusion ratio is 10. 2008 tax software 8%, and your monthly exclusion is $90. 2008 tax software After 5 years (60 months), you have recovered tax free only $5,400 ($90 x 60). 2008 tax software An itemized deduction for the unrecovered net cost of $4,600 ($10,000 net cost minus $5,400) may be taken on your final income tax return. 2008 tax software Your unrecovered investment is determined without regard to the refund feature adjustment, discussed earlier, under Adjustments. 2008 tax software Exclusion not limited to net cost. 2008 tax software   If your annuity starting date was before 1987, you could continue to take your monthly exclusion for as long as you receive your annuity. 2008 tax software If you choose a joint and survivor annuity, your survivor continues to take the survivor's exclusion figured as of the annuity starting date. 2008 tax software The total exclusion may be more than your investment in the contract. 2008 tax software How To Use Actuarial Tables In figuring, under the General Rule, the taxable part of your annuity payments that you are to get for the rest of your life (rather than for a fixed number of years), you must use one or more of the actuarial tables in this publication. 2008 tax software Unisex Annuity Tables Effective July 1, 1986, the Internal Revenue Service adopted new annuity Tables V through VIII, in which your sex is not considered when determining the applicable factor. 2008 tax software These tables correspond to the old Tables I through IV. 2008 tax software In general, Tables V through VIII must be used if you made contributions to the retirement plan after June 30, 1986. 2008 tax software If you made no contributions to the plan after June 30, 1986, generally you must use only Tables I through IV. 2008 tax software However, if you received an annuity payment after June 30, 1986, you may elect to use Tables V through VIII (see Annuity received after June 30, 1986, later). 2008 tax software Special Elections Although you generally must use Tables V through VIII if you made contributions to the retirement plan after June 30, 1986, and Tables I through IV if you made no contributions after June 30, 1986, you can make the following special elections to select which tables to use. 2008 tax software Contributions made both before July 1986 and after June 1986. 2008 tax software   If you made contributions to the retirement plan both before July 1986 and after June 1986, you may elect to use Tables I through IV for the pre-July 1986 cost of the contract, and Tables V through VIII for the post-June 1986 cost. 2008 tax software (See the examples below. 2008 tax software )    Making the election. 2008 tax software Attach this statement to your income tax return for the first year in which you receive an annuity:    “I elect to apply the provisions of paragraph (d) of section 1. 2008 tax software 72–6 of the Income Tax Regulations. 2008 tax software ”   The statement must also include your name, address, social security number, and the amount of the pre-July 1986 investment in the contract. 2008 tax software   If your investment in the contract includes post-June 1986 contributions to the plan, and you do not make the election to use Tables I through IV and Tables V through VIII, then you can only use Tables V through VIII in figuring the taxable part of your annuity. 2008 tax software You must also use Tables V through VIII if you are unable or do not wish to determine the portions of your contributions which were made before July 1, 1986, and after June 30, 1986. 2008 tax software    Advantages of election. 2008 tax software In general, a lesser amount of each annual annuity payment is taxable if you separately figure your exclusion ratio for pre-July 1986 and post-June 1986 contributions. 2008 tax software    If you intend to make this election, save your records that substantiate your pre-July 1986 and post-June 1986 contributions. 2008 tax software If the death benefit exclusion applies (see discussion, earlier), you do not have to apportion it between the pre-July 1986 and the post-June 1986 investment in the contract. 2008 tax software   The following examples illustrate the separate computations required if you elect to use Tables I through IV for your pre-July 1986 investment in the contract and Tables V through VIII for your post-June 1986 investment in the contract. 2008 tax software Example 1. 2008 tax software Bill, who is single, contributed $42,000 to the retirement plan and will receive an annual annuity of $24,000 for life. 2008 tax software Payment of the $42,000 contribution is guaranteed under a refund feature. 2008 tax software Bill is 55 years old as of the annuity starting date. 2008 tax software For figuring the taxable part of Bill's annuity, he chose to make separate computations for his pre-July 1986 investment in the contract of $41,300, and for his post-June 1986 investment in the contract of $700. 2008 tax software       Pre- July 1986   Post- June 1986 A. 2008 tax software Adjustment for refund feature         1) Net cost $41,300   $700   2) Annual annuity—$24,000  ($41,300/$42,000 × $24,000) $23,600       ($700/$42,000 × $24,000)     $400   3) Guarantee under contract $41,300   $700   4) No. 2008 tax software of years payments  guaranteed (rounded), A(3) ÷ A(2) 2   2   5) Applicable percentage from  Tables III and VII 1%   0%   6) Adjustment for value of refund  feature, A(5) × smaller of A(1)  or A(3) $413   $0 B. 2008 tax software Investment in the contract         1) Net cost $41,300   $700   2) Minus: Amount in A(6) 413   0   3) Investment in the contract $40,887   $700 C. 2008 tax software Expected return         1) Annual annuity receivable $24,000   $24,000   2) Multiples from Tables I and V 21. 2008 tax software 7   28. 2008 tax software 6   3) Expected return, C(1) × C(2) $520,800   $686,400 D. 2008 tax software Tax-free part of annuity         1) Exclusion ratio as decimal,  B(3) ÷ C(3) . 2008 tax software 079   . 2008 tax software 001   2) Tax-free part, C(1) × D(1) $1,896   $24 The tax-free part of Bill's total annuity is $1,920 ($1,896 plus $24). 2008 tax software The taxable part of his annuity is $22,080 ($24,000 minus $1,920). 2008 tax software If the annuity starting date is after 1986, the exclusion over the years cannot exceed the net cost (figured without any reduction for a refund feature). 2008 tax software Example 2. 2008 tax software Al is age 62 at his nearest birthday to the annuity starting date. 2008 tax software Al's wife is age 60 at her nearest birthday to the annuity starting date. 2008 tax software The joint and survivor annuity pays $1,000 per month to Al for life, and $500 per month to Al's surviving wife after his death. 2008 tax software The pre-July 1986 investment in the contract is $53,100 and the post-June 1986 investment in the contract is $7,000. 2008 tax software Al makes the election described in Example 1 . 2008 tax software For purposes of this example, assume the refund feature adjustment is zero. 2008 tax software If an adjustment is required, IRS will figure the amount. 2008 tax software See Requesting a Ruling on Taxation of Annuity near the end of this publication. 2008 tax software       Pre-  July 1986   Post-  June 1986 A. 2008 tax software Adjustment for refund feature         1) Net cost $53,100   $7,000   2) Annual annuity—$12,000  ($53,100/$60,100 × $12,000) $10,602       ($7,000/$60,100 × $12,000)     $1,398   3) Guaranteed under the contract $53,100   $7,000   4) Number of years guaranteed,  rounded, A(3) ÷ A(2) 5   5   5) Applicable percentages 0%   0%   6) Refund feature adjustment, A(5) × smaller of A(1) or A(3) 0   0 B. 2008 tax software Investment in the contract         1) Net cost $53,100   $7,000   2) Refund feature adjustment 0   0   3) Investment in the contract adjusted for refund feature $53,100   $7,000 C. 2008 tax software Expected return         1) Multiple for both annuitants from Tables II and VI 25. 2008 tax software 4   28. 2008 tax software 8   2) Multiple for first annuitant from Tables I and V 16. 2008 tax software 9   22. 2008 tax software 5   3) Multiple applicable to surviving annuitant, subtract C(2) from C(1) 8. 2008 tax software 5   6. 2008 tax software 3   4) Annual annuity to surviving annuitant $6,000   $6,000   5) Portion of expected return for surviving annuitant, C(4) × C(3) $51,000   $37,800   6) Annual annuity to first annuitant $12,000   $12,000   7) Plus: Portion of expected return for first annuitant, C(6) × C(2) $202,800   $270,000   8) Expected return for both annuitants, C(5) + C(7) $253,800   $307,800 D. 2008 tax software Tax-free part of annuity         1) Exclusion ratio as a decimal, B(3) ÷ C(8) . 2008 tax software 209   . 2008 tax software 023   2) Retiree's tax-free part of annuity, C(6) × D(1) $2,508   $276   3) Survivor's tax-free part of annuity, C(4) × D(1) $1,254   $138 The tax-free part of Al's total annuity is $2,784 ($2,508 + $276). 2008 tax software The taxable part of his annuity is $9,216 ($12,000 − $2,784). 2008 tax software The exclusion over the years cannot exceed the net cost of the contract (figured without any reduction for a refund feature) if the annuity starting date is after 1986. 2008 tax software After Al's death, his widow will apply the same exclusion percentages (20. 2008 tax software 9% and 2. 2008 tax software 3%) to her annual annuity of $6,000 to figure the tax-free part of her annuity. 2008 tax software Annuity received after June 30, 1986. 2008 tax software   If you receive an annuity payment after June 30, 1986, (regardless of your annuity starting date), you may elect to treat the entire cost of the contract as post-June 1986 cost (even if you made no post-June 1986 contributions to the plan) and use Tables V through VIII. 2008 tax software Once made, you cannot revoke the election, which will apply to all payments during the year and in any later year. 2008 tax software    Make the election by attaching the following statement to your income tax return. 2008 tax software    “I elect, under section 1. 2008 tax software 72–9 of the Income Tax Regulations, to treat my entire cost of the contract as a post-June 1986 cost of the plan. 2008 tax software ”   The statement must also include your name, address, and social security number. 2008 tax software   You should also indicate you are making this election if you are unable or do not wish to determine the parts of your contributions which were made before July 1, 1986, and after June 30, 1986. 2008 tax software Disqualifying form of payment or settlement. 2008 tax software   If your annuity starting date is after June 30, 1986, and the contract provides for a disqualifying form of payment or settlement, such as an option to receive a lump sum in full discharge of the obligation under the contract, the entire investment in the contract is treated as post-June 1986 investment in the contract. 2008 tax software See regulations section 1. 2008 tax software 72–6(d)(3) for additional examples of disqualifying forms of payment or settlement. 2008 tax software You can find the Income Tax Regulations in many libraries and at Internal Revenue Service Offices. 2008 tax software Worksheets for Determining Taxable Annuity Worksheets I and II. 2008 tax software   Worksheets I and II follow for determining your taxable annuity under Regulations Section 1. 2008 tax software 72–6(d)(6) Election. 2008 tax software Worksheet I For Determining Taxable Annuity Under Regulations Section 1. 2008 tax software 72-6(d)(6) Election For Single Annuitant With No Survivor Annuity               Pre-July 1986   Post-June 1986 A. 2008 tax software   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 2008 tax software )             2)   Annual annuity allocation:                   Portion of net cost in A(1) x annual annuity                   Net cost             3)   Guaranteed under the contract             4)   Number of years guaranteed, rounded to whole years:                   A(3) divided by A(2)             5)   Applicable percentages* from Tables III and VII                   *If your annuity meets the three conditions listed in Zero value of refund feature in Investment in the Contract, earlier, both percentages are 0. 2008 tax software If not, the IRS will calculate the refund feature percentage. 2008 tax software             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 2008 tax software   Investment in the Contract             1)   Net cost:                   A(1)             2)   Refund feature adjustment:                   A(6)             3)   Investment in the contract adjusted for refund feature:                   B(1) minus B(2)                             C. 2008 tax software   Expected Return             1)   Annual Annuity:                   12 times monthly annuity**             2)   Expected return multiples from Tables I and V             3)     Expected return:                   C(1) times C(2)                             D. 2008 tax software   Tax-Free Part of Annuity             1)     Exclusion ratio, as a decimal rounded to 3 places:                   B(3) divided by C(3)             2)     Tax-free part of annuity:                   C(1) times D(1)             **If the annuity is not paid monthly, figure the amount to enter by using the total number of periodic payments for the year times the amount of the periodic payment. 2008 tax software     Worksheet II For Determining Taxable Annuity Under Regulations Section 1. 2008 tax software 72-6(d)(6) Election For Joint and Survivor Annuity               Pre-July 1986   Post-June 1986 A. 2008 tax software   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 2008 tax software )             2)   Annual annuity allocation:                   Portion of net cost in A(1) x annual annuity                   Net cost             3)   Guaranteed under the contract             4)     Number of years guaranteed, rounded to whole years:                   A(3) divided by A(2)             5)   Applicable percentages*                   *If your annuity meets the three conditions listed in Zero value of refund feature in Investment in the Contract, earlier, both percentages are 0. 2008 tax software If not, the IRS will calculate the refund feature percentage. 2008 tax software             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 2008 tax software   Investment in the Contract             1)   Net cost:                   A(1)             2)   Refund feature adjustment:                   A(6)             3)   Investment in the contract adjusted for refund future:                   B(1) minus B(2)                             C. 2008 tax software   Expected Return             1)   Multiples for both annuitants, Tables II and VI             2)   Multiple for retiree. 2008 tax software Tables I and VI             3)   Multiple for survivor:                   C(1) minus C(2)             4)   Annual annuity to survivor:                   12 times potential monthly rate for survivor**             5)   Expected return for survivor:                   C(3) times C(4)             6)   Annual annuity to retiree:                   12 times monthly rate for retiree**             7)   Expected return for retiree:                   C(2) times C(6)             8)   Total expected return:                   C(5) plus C(7)                             D. 2008 tax software   Tax-Free Part of Annuity             1)   Exclusion ratio, as a decimal rounded to 3 places:                   B(3) divided by C(8)             2)   Retiree's tax-free part of annuity:                   C(6) times D(1)             3)   Survivor's tax-free part of annuity, if surviving after death of retiree:                   C(4) times D(1)             **If the annuity is not paid monthly, figure the amount to enter by using the total number of periodic payments for the year times the amount of the periodic payment. 2008 tax software   Actuarial Tables Please click here for the text description of the image. 2008 tax software Actuarial Tables Please click here for the text description of the image. 2008 tax software Actuarial Tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please 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software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Please click here for the text description of the image. 2008 tax software Actuarial tables Requesting a Ruling on Taxation of Annuity If you are a retiree, or the survivor of an employee or retiree, you may ask the Internal Revenue Service to help you determine the taxation of your annuity. 2008 tax software If you make this request, you are asking for a ruling. 2008 tax software User fee. 2008 tax software   Under the law in effect at the time this publication went to print, the IRS must charge a user fee for all ruling requests. 2008 tax software You should call the IRS for the proper fee. 2008 tax software A request solely for the value of the refund feature is not treated as a ruling request and requires no fee. 2008 tax software Send your request to:     Internal Revenue Service  Attention: EP Letter Rulings P. 2008 tax software O. 2008 tax software Box 27063 McPherson Station Washington, DC 20038 The user fee is allowed as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit. 2008 tax software When to make the request. 2008 tax software   Please note that requests sent between February 1 and April 15 may experience some delay. 2008 tax software We process requests in the order received, and we will reply to your request as soon as we can process it. 2008 tax software If you do not receive your ruling by the required filing date, you may use Form 4868, Application for Automatic Extension of Time To File U. 2008 tax software S. 2008 tax software Individual Income Tax Return, to get an extension of time to file. 2008 tax software Information you must furnish. 2008 tax software   You must furnish the information listed below so the IRS can comply with your request. 2008 tax software Failure to furnish the information will result in a delay in processing your request. 2008 tax software Please send only copies of the following documents, as the IRS retains all material sent for its records: A letter explaining the question(s) you wish to have resolved or the information you need from the ruling. 2008 tax software Copies of any documents showing distributions, annuity rates, and annuity options available to you. 2008 tax software A copy of any Form 1099–R you received since your annuity began. 2008 tax software A statement indicating whether you have filed your return for the year for which you are making the request. 2008 tax software If you have requested an extension of time to file that return, please indicate the extension date. 2008 tax software Your daytime phone number. 2008 tax software Your current mailing address. 2008 tax software A power of attorney if someone other than you, an attorney, a certified public accountant, or an enrolled agent is signing this request. 2008 tax software Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose. 2008 tax software A completed Tax Information Sheet (or facsimile) shown on the next page. 2008 tax software Sign and date the Disclosure and Perjury Statement (or facsimile) at the end of the tax information sheet. 2008 tax software This statement must be signed by the retiree or the survivor annuitant. 2008 tax software It cannot be signed by a representative. 2008 tax software Tax Information Sheet Please click here for the text description of the image. 2008 tax software Tax Information Sheet Please click here for the text description of the image. 2008 tax software Tax Information Sheet (continued) How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 2008 tax software Free help with your tax return. 2008 tax software   You can get free help preparing your return nationwide from IRS-certified volunteers. 2008 tax software The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 2008 tax software The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2008 tax software Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2008 tax software In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 2008 tax software To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 2008 tax software gov, download the IRS2Go app, or call 1-800-906-9887. 2008 tax software   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2008 tax software To find the nearest AARP Tax-Aide site, visit AARP's website at www. 2008 tax software aarp. 2008 tax software org/money/taxaide or call 1-888-227-7669. 2008 tax software For more information on these programs, go to IRS. 2008 tax software gov and enter “VITA” in the search box. 2008 tax software Internet. 2008 tax software    IRS. 2008 tax software gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 2008 tax software Download the free IRS2Go app from the iTunes app store or from Google Play. 2008 tax software Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 2008 tax software Check the status of your 2013 refund with the Where's My Refund? application on IRS. 2008 tax software gov or download the IRS2Go app and select the Refund Status option. 2008 tax software The IRS issues more than 9 out of 10 refunds in less than 21 days. 2008 tax software Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 2008 tax software You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2008 tax software The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2008 tax software Use the Interactive Tax Assistant (ITA) to research your tax questions. 2008 tax software No need to wait on the phone or stand in line. 2008 tax software The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 2008 tax software When you reach the response screen, you can print the entire interview and the final response for your records. 2008 tax software New subject areas are added on a regular basis. 2008 tax software  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 2008 tax software gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 2008 tax software You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 2008 tax software The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 2008 tax software When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 2008 tax software Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 2008 tax software You can also ask the IRS to mail a return or an account transcript to you. 2008 tax software Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 2008 tax software gov or by calling 1-800-908-9946. 2008 tax software Tax return and tax account transcripts are generally available for the current year and the past three years. 2008 tax software Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 2008 tax software Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 2008 tax software If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 2008 tax software Check the status of your amended return using Where's My Amended Return? Go to IRS. 2008 tax software gov and enter Where's My Amended Return? in the search box. 2008 tax software You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2008 tax software It can take up to 3 weeks from the date you mailed it to show up in our system. 2008 tax software Make a payment using one of several safe and convenient electronic payment options available on IRS. 2008 tax software gov. 2008 tax software Select the Payment tab on the front page of IRS. 2008 tax software gov for more information. 2008 tax software Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 2008 tax software Figure your income tax withholding with the IRS Withholding Calculator on IRS. 2008 tax software gov. 2008 tax software Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 2008 tax software Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 2008 tax software gov. 2008 tax software Request an Electronic Filing PIN by going to IRS. 2008 tax software gov and entering Electronic Filing PIN in the search box. 2008 tax software Download forms, instructions and publications, including accessible versions for people with disabilities. 2008 tax software Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 2008 tax software gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 2008 tax software An employee can answer questions about your tax account or help you set up a payment plan. 2008 tax software Before you visit, check the Office Locator on IRS. 2008 tax software gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 2008 tax software If you have a special need, such as a disability, you can request an appointment. 2008 tax software Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 2008 tax software Apply for an Employer Identification Number (EIN). 2008 tax software Go to IRS. 2008 tax software gov and enter Apply for an EIN in the search box. 2008 tax software Read the Internal Revenue Code, regulations, or other official guidance. 2008 tax software Read Internal Revenue Bulletins. 2008 tax software Sign up to receive local and national tax news and more by email. 2008 tax software Just click on “subscriptions” above the search box on IRS. 2008 tax software gov and choose from a variety of options. 2008 tax software    Phone. 2008 tax software You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 2008 tax software Download the free IRS2Go app from the iTunes app store or from Google Play. 2008 tax software Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 2008 tax software gov, or download the IRS2Go app. 2008 tax software Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 2008 tax software The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2008 tax software Mos