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Amendment For Taxes

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Amendment For Taxes

Amendment for taxes Publication 721 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. Amendment for taxes Tax questions. Amendment for taxes Useful Items - You may want to see: Reminders Future developments. Amendment for taxes  For the latest information about developments related to Publication 721, such as legislation enacted after it was published, go to www. Amendment for taxes IRS. Amendment for taxes gov/pub721. Amendment for taxes Phased retirement. Amendment for taxes   The new phased retirement program was signed into law by the Moving Ahead for Progress in the 21st Century Act and will be available for retirement eligible individuals once the regulations for this program are effective. Amendment for taxes This new program will allow eligible employees to begin receiving annuity payments while working part-time. Amendment for taxes For more information, go to the Office of Personnel Management (OPM) website at www. Amendment for taxes opm. Amendment for taxes gov. Amendment for taxes Roth Thrift Savings Plan (TSP) balance. Amendment for taxes  You may be able to contribute to a designated Roth account through the TSP known as the Roth TSP. Amendment for taxes Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. Amendment for taxes Qualified distributions from a Roth TSP are not included in your income. Amendment for taxes See Thrift Savings Plan in Part II for more information. Amendment for taxes Rollovers. Amendment for taxes  You can roll over certain amounts from the CSRS, FERS, or TSP, to a tax-sheltered annuity plan (403(b) plan) or a state or local government section 457 deferred compensation plan. Amendment for taxes See Rollover Rules in Part II. Amendment for taxes Rollovers by surviving spouse. Amendment for taxes  You may be able to roll over a distribution you receive as the surviving spouse of a deceased employee or retiree into a qualified retirement plan or an IRA. Amendment for taxes See Rollover Rules in Part II. Amendment for taxes Thrift Savings Plan (TSP) beneficiary participant accounts. Amendment for taxes  If you are the spouse beneficiary of a decedent's TSP account, you have the option of leaving the death benefit payment in a TSP account in your own name (a beneficiary participant account). Amendment for taxes The amounts in the beneficiary participant account are neither taxable or reportable until you choose to make a withdrawal, or otherwise receive a distribution from the account. Amendment for taxes Benefits for public safety officer's survivors. Amendment for taxes  A survivor annuity received by the spouse, former spouse, or child of a public safety officer killed in the line of duty generally will be excluded from the recipient's income. Amendment for taxes For more information, see Dependents of public safety officers in Part IV. Amendment for taxes Uniformed services Thrift Savings Plan (TSP) accounts. Amendment for taxes  If you have a uniformed services TSP account, it may include contributions from combat zone pay. Amendment for taxes This pay is tax-exempt and contributions attributable to that pay are tax-exempt when they are distributed from the uniformed services TSP account. Amendment for taxes However, any earnings on those contributions are subject to tax when they are distributed. Amendment for taxes The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. Amendment for taxes If you have both a civilian and a uniformed services TSP account, you should apply the rules discussed in this publication separately to each account. Amendment for taxes You can get more information from the TSP website, www. Amendment for taxes tsp. Amendment for taxes gov, or the TSP Service Office. Amendment for taxes Photographs of missing children. Amendment for taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Amendment for taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Amendment for taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Amendment for taxes Introduction This publication explains how the federal income tax rules apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. Amendment for taxes These benefits are paid primarily under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). Amendment for taxes Tax rules for annuity benefits. Amendment for taxes   Part of the annuity benefits you receive is a tax-free recovery of your contributions to the CSRS or FERS. Amendment for taxes The rest of your benefits are taxable. Amendment for taxes If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the taxable and tax-free parts. Amendment for taxes If your annuity starting date is before November 19, 1996, you generally could have chosen to use the Simplified Method or the General Rule. Amendment for taxes See Part II, Rules for Retirees . Amendment for taxes Thrift Savings Plan. Amendment for taxes   The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer their employees. Amendment for taxes This plan is similar to private sector 401(k) plans. Amendment for taxes You can defer tax on part of your pay by having it contributed to your traditional balance in the plan. Amendment for taxes The contributions and earnings on them are not taxed until they are distributed to you. Amendment for taxes Also the TSP offers a Roth TSP option. Amendment for taxes Contributions to this type of balance are after tax and qualified distributions from the account are tax free. Amendment for taxes See Thrift Savings Plan in Part II. Amendment for taxes Comments and suggestions. Amendment for taxes   We welcome your comments about this publication and your suggestions for future editions. Amendment for taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Amendment for taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Amendment for taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Amendment for taxes   You can send your comments from www. Amendment for taxes irs. Amendment for taxes gov/formspubs/. Amendment for taxes Click on “More Information” and then on “Comment on Tax Forms and Publications”. Amendment for taxes   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Amendment for taxes Ordering forms and publications. Amendment for taxes   Visit www. Amendment for taxes irs. Amendment for taxes gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Amendment for taxes Internal Revenue Service 1201 N. Amendment for taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Amendment for taxes   If you have a tax question, check the information available on IRS. Amendment for taxes gov or call 1-800-829-1040. Amendment for taxes We cannot answer tax questions sent to either of the above addresses. Amendment for taxes Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 939 General Rule for Pensions and Annuities Form (and Instructions) CSA 1099R Statement of Annuity Paid CSF 1099R Statement of Survivor Annuity Paid W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Amendment for taxes 5329 Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts See How To Get Tax Help near the end of this publication for information about getting publications and forms. Amendment for taxes Prev  Up  Next   Home   More Online Publications
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The Amendment For Taxes

Amendment for taxes 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. Amendment for taxes A pension is generally a series of payments made to you after you retire from work. Amendment for taxes Pension payments are made regularly and are for past services with an employer. Amendment for taxes An annuity is a series of payments under a contract. Amendment for taxes You can buy the contract alone or you can buy it with the help of your employer. Amendment for taxes Annuity payments are made regularly for more than one full year. Amendment for taxes Note. Amendment for taxes Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted. Amendment for taxes Types of pensions and annuities. Amendment for taxes   Particular types of pensions and annuities include: Fixed period annuities. Amendment for taxes You receive definite amounts at regular intervals for a definite length of time. Amendment for taxes Annuities for a single life. Amendment for taxes You receive definite amounts at regular intervals for life. Amendment for taxes The payments end at death. Amendment for taxes Joint and survivor annuities. Amendment for taxes The first annuitant receives a definite amount at regular intervals for life. Amendment for taxes After he or she dies, a second annuitant receives a definite amount at regular intervals for life. Amendment for taxes The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. Amendment for taxes Variable annuities. Amendment for taxes You receive payments that may vary in amount for a definite length of time or for life. Amendment for taxes The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds or cost-of-living indexes. Amendment for taxes Disability pensions. Amendment for taxes You are under minimum retirement age and receive payments because you retired on disability. Amendment for taxes 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. Amendment for taxes If your annuity starting date is after November 18, 1996, the General Rule cannot be used for the following qualified plans. Amendment for taxes 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. Amendment for taxes This plan must meet Internal Revenue Code requirements. Amendment for taxes It qualifies for special tax benefits, including tax deferral for employer contributions and rollover distributions. Amendment for taxes However, you must use the General Rule if you were 75 or over and the annuity payments are guaranteed for more than 5 years. Amendment for taxes A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. Amendment for taxes A tax-sheltered annuity is a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization. Amendment for taxes   The General Rule is used to figure the tax treatment of various types of pensions and annuities, including nonqualified employee plans. Amendment for taxes A nonqualified employee plan is an employer's plan that does not meet Internal Revenue Code requirements. Amendment for taxes It does not qualify for most of the tax benefits of a qualified plan. Amendment for taxes Annuity worksheets. Amendment for taxes   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. Amendment for taxes Request for a ruling. Amendment for taxes   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. Amendment for taxes This is treated as a request for a ruling. Amendment for taxes See Requesting a Ruling on Taxation of Annuity near the end of this publication. Amendment for taxes Withholding tax and estimated tax. Amendment for taxes   Your pension or annuity is subject to federal income tax withholding unless you choose not to have tax withheld. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes 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). Amendment for taxes These payments are also known as amounts received as an annuity. Amendment for taxes 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. Amendment for taxes In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments. Amendment for taxes The amount of each payment that is more than the part that represents your net cost is taxable. Amendment for taxes 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. Amendment for taxes These terms are explained in the following discussions. Amendment for taxes 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. Amendment for taxes First, find your net cost of the contract as of the annuity starting date (defined later). Amendment for taxes To find this amount, you must first figure the total premiums, contributions, or other amounts paid. Amendment for taxes This includes the amounts your employer contributed if you were required to include these amounts in income. Amendment for taxes It also includes amounts you actually contributed (except amounts for health and accident benefits and deductible voluntary employee contributions). Amendment for taxes 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. Amendment for taxes Any additional premiums paid for double indemnity or disability benefits. Amendment for taxes Any other tax-free amounts you received under the contract or plan before the later of the dates in (1). Amendment for taxes 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. Amendment for taxes Example. Amendment for taxes 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. Amendment for taxes The annuity starting date is July 1. Amendment for taxes This is the date you use in figuring your investment in the contract and your expected return (discussed later). Amendment for taxes Adjustments If any of the following items apply, adjust (add or subtract) your total cost to find your net cost. Amendment for taxes Foreign employment. Amendment for taxes   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. Amendment for taxes 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. Amendment for taxes Foreign employment contributions while a nonresident alien. Amendment for taxes   In determining your cost, special rules apply if you are a U. Amendment for taxes S. Amendment for taxes citizen or resident alien who received distributions from a plan to which contributions were made while you were a nonresident alien. Amendment for taxes 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. Amendment for taxes Death benefit exclusion. Amendment for taxes   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. Amendment for taxes The beneficiary of a deceased employee who died after August 20, 1996, will not qualify for the death benefit exclusion. Amendment for taxes How to adjust your total cost. Amendment for taxes   If you are eligible, treat the amount of any allowable death benefit exclusion as additional cost paid by the employee. Amendment for taxes Add it to the cost or unrecovered cost of the annuity at the annuity starting date. Amendment for taxes See Example 3 under Computation Under General Rule for an illustration of the adjustment to the cost of the contract. Amendment for taxes Net cost. Amendment for taxes   Your total cost plus certain adjustments and minus other amounts already recovered before the annuity starting date is your net cost. Amendment for taxes This is the unrecovered investment in the contract as of the annuity starting date. Amendment for taxes If your annuity starting date is after 1986, this is the maximum amount that you may recover tax free under the contract. Amendment for taxes Refund feature. Amendment for taxes   Adjustment for the value of the refund feature is only applicable when you report your pension or annuity under the General Rule. Amendment for taxes 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. Amendment for taxes   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. Amendment for taxes Zero value of refund feature. Amendment for taxes   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. Amendment for taxes   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). Amendment for taxes   If you do not meet these requirements, you will have to figure the value of the refund feature, as explained in the following discussion. Amendment for taxes Examples. Amendment for taxes The first example shows how to figure the value of the refund feature when there is only one beneficiary. Amendment for taxes 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. Amendment for taxes In both examples, the taxpayer elects to use Tables V through VIII. Amendment for taxes 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. Amendment for taxes Example 1. Amendment for taxes At age 65, Barbara bought for $21,053 an annuity with a refund feature. Amendment for taxes She will get $100 a month for life. Amendment for taxes 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. Amendment for taxes In this case, the contract cost and the total guaranteed return are the same ($21,053). Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes 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). Amendment for taxes 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. Amendment for taxes Example 2. Amendment for taxes John died while still employed. Amendment for taxes His widow, Eleanor, age 48, receives $171 a month for the rest of her life. Amendment for taxes John's son, Elmer, age 9, receives $50 a month until he reaches age 18. Amendment for taxes John's contributions to the retirement fund totaled $7,559. Amendment for taxes 45, with interest on those contributions of $1,602. Amendment for taxes 53. Amendment for taxes The guarantee or total refund feature of the contract is $9,161. Amendment for taxes 98 ($7,559. Amendment for taxes 45 plus $1,602. Amendment for taxes 53). Amendment for taxes 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. Amendment for taxes 9 $71,614. Amendment for taxes 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. Amendment for taxes 0 5,400. Amendment for taxes 00   3) Total expected return   $77,014. Amendment for taxes 80 B) Adjustment for refund feature:       1) Contributions (net cost) $7,559. Amendment for taxes 45   2) Guaranteed amount (contributions of $7,559. Amendment for taxes 45 plus interest of $1,602. Amendment for taxes 53) $9,161. Amendment for taxes 98   3) Minus: Expected return under child's (temporary life) annuity (A(2)) 5,400. Amendment for taxes 00   4) Net guaranteed amount $3,761. Amendment for taxes 98   5) Multiple from Table VII (nearest age 48 for 2 years duration (recovery of $3,761. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes See the discussion of expected return, later in this publication. Amendment for taxes Free IRS help. Amendment for taxes   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. Amendment for taxes Expected Return Your expected return is the total amount you and other eligible annuitants can expect to receive under the contract. Amendment for taxes The following discussions explain how to figure the expected return with each type of annuity. Amendment for taxes A person's age, for purposes of figuring the expected return, is the age at the birthday nearest to the annuity starting date. Amendment for taxes Fixed period annuity. Amendment for taxes   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. Amendment for taxes It is the total amount you will get beginning at the annuity starting date. Amendment for taxes You will receive specific periodic payments for a definite period of time, such as a fixed number of months (but not less than 13). Amendment for taxes 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. Amendment for taxes Single life annuity. Amendment for taxes   If you are to get annuity payments for the rest of your life, find your expected return as follows. Amendment for taxes You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. Amendment for taxes These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later). Amendment for taxes   You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. Amendment for taxes See Adjustments to Tables I, II, V, VI, and VIA following Table I. Amendment for taxes Example. Amendment for taxes Henry bought an annuity contract that will give him an annuity of $500 a month for his life. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes 2 multiple by +. Amendment for taxes 1. Amendment for taxes His expected return would then be $115,800 ($6,000 × 19. Amendment for taxes 3). Amendment for taxes Annuity for shorter of life or specified period. Amendment for taxes   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. Amendment for taxes To figure your expected return, multiply the amount of your annual payment by a multiple in Table IV or VIII for temporary life annuities. Amendment for taxes 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. Amendment for taxes Example. Amendment for taxes Harriet purchased an annuity this year that will pay her $200 each month for five years or until she dies, whichever period is shorter. Amendment for taxes She was age 65 at her birthday nearest the annuity starting date. Amendment for taxes 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. Amendment for taxes 9 Expected return $11,760 She uses Table VIII (not Table IV) because all her contributions were made after June 30, 1986. Amendment for taxes See Special Elections, later. Amendment for taxes Joint and survivor annuities. Amendment for taxes   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. Amendment for taxes To figure the expected return, multiply the annual payment by a multiple in Table II or VI based on your joint life expectancies. Amendment for taxes If your payments are made quarterly, semiannually, or annually, you may need to adjust these multiples. Amendment for taxes See Adjustments to Tables I, II, V, VI, and VIA following Table I near the end of this publication. Amendment for taxes Example. Amendment for taxes 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. Amendment for taxes At John's annuity starting date, his age at his nearest birthday is 70 and his wife's at her nearest birthday is 67. Amendment for taxes The expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table VI, ages 67 and 70 × 22. Amendment for taxes 0 Expected return $132,000 Different payments to survivor. Amendment for taxes   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. Amendment for taxes Example 1. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes 0 Multiple for Gerald, age 70 (from Table V)   16. Amendment for taxes 0 Difference: Multiple applicable to Mary   6. Amendment for taxes 0 Gerald's annual payment ($500 × 12) $6,000   Gerald's multiple 16. Amendment for taxes 0   Gerald's expected return   $96,000 Mary's annual payment ($350 × 12) $4,200   Mary's multiple 6. Amendment for taxes 0   Mary's expected return   25,200 Total expected return under the contract   $121,200 Example 2. Amendment for taxes Your husband died while still employed. Amendment for taxes 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. Amendment for taxes Your daughters, Marie and Jean, are each entitled to immediate temporary life annuities of $150 a month until they reach age 18. Amendment for taxes You were 50 years old at the annuity starting date. Amendment for taxes Marie was 16 and Jean was 14. Amendment for taxes 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. Amendment for taxes 1 × $4,800 annual payment) $158,880 Marie, age 16 for 2 years duration (multiple from Table VIII—2. Amendment for taxes 0 × $1,800 annual payment) 3,600 Jean, age 14 for 4 years duration (multiple from Table VIII—4. Amendment for taxes 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. Amendment for taxes Computation Under the General Rule Note. Amendment for taxes Variable annuities use a different computation for determining the exclusion amounts. Amendment for taxes See Variable annuities later. Amendment for taxes Under the General Rule, you figure the taxable part of your annuity by using the following steps: Step 1. Amendment for taxes   Figure the amount of your investment in the contract, including any adjustments for the refund feature and the death benefit exclusion, if applicable. Amendment for taxes See Death benefit exclusion , earlier. Amendment for taxes Step 2. Amendment for taxes   Figure your expected return. Amendment for taxes Step 3. Amendment for taxes   Divide Step 1 by Step 2 and round to three decimal places. Amendment for taxes This will give you the exclusion percentage. Amendment for taxes Step 4. Amendment for taxes   Multiply the exclusion percentage by the first regular periodic payment. Amendment for taxes The result is the tax-free part of each pension or annuity payment. Amendment for taxes   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. Amendment for taxes 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. Amendment for taxes   Each annuitant applies the same exclusion percentage to his or her initial payment called for in the contract. Amendment for taxes Step 5. Amendment for taxes   Multiply the tax-free part of each payment (step 4) by the number of payments received during the year. Amendment for taxes This will give you the tax-free part of the total payment for the year. Amendment for taxes    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. Amendment for taxes This fractional amount is multiplied by your exclusion percentage to get the tax-free part. Amendment for taxes Step 6. Amendment for taxes   Subtract the tax-free part from the total payment you received. Amendment for taxes The rest is the taxable part of your pension or annuity. Amendment for taxes Example 1. Amendment for taxes You purchased an annuity with an investment in the contract of $10,800. Amendment for taxes Under its terms, the annuity will pay you $100 a month for life. Amendment for taxes The multiple for your age (age 65) is 20. Amendment for taxes 0 as shown in Table V. Amendment for taxes Your expected return is $24,000 (20 × 12 × $100). Amendment for taxes Your cost of $10,800, divided by your expected return of $24,000, equals 45. Amendment for taxes 0%. Amendment for taxes This is the percentage you will not have to include in income. Amendment for taxes 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. Amendment for taxes If you had received only six payments of $100 ($600) during the year, your exclusion would have been $270 (45% of $100 × 6 payments). Amendment for taxes Example 2. Amendment for taxes Gerald bought a joint and survivor annuity. Amendment for taxes Gerald's investment in the contract is $62,712 and the expected return is $121,200. Amendment for taxes The exclusion percentage is 51. Amendment for taxes 7% ($62,712 ÷ $121,200). Amendment for taxes Gerald will receive $500 a month ($6,000 a year). Amendment for taxes Each year, until his net cost is recovered, $3,102 (51. Amendment for taxes 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. Amendment for taxes If Gerald dies, his wife will receive $350 a month ($4,200 a year). Amendment for taxes If Gerald had not recovered all of his net cost before his death, his wife will use the same exclusion percentage (51. Amendment for taxes 7%). Amendment for taxes Each year, until the entire net cost is recovered, his wife will receive $2,171. Amendment for taxes 40 (51. Amendment for taxes 7% of her payments received of $4,200) tax free. Amendment for taxes She will include $2,028. Amendment for taxes 60 ($4,200 − $2,171. Amendment for taxes 40) in her income tax return. Amendment for taxes Example 3. Amendment for taxes 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. Amendment for taxes Your two daughters each receive annual annuities of $1,800 until they reach age 18. Amendment for taxes Your husband contributed $25,576 to the plan. Amendment for taxes You are eligible for the $5,000 death benefit exclusion because your husband died before August 21, 1996. Amendment for taxes 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. Amendment for taxes The exclusion percentage of 18. Amendment for taxes 0% ($30,576 ÷ $169,680) applies to the annuity payments you and each of your daughters receive. Amendment for taxes Each full year $864 (18. Amendment for taxes 0% × $4,800) will be tax free to you, and you must include $3,936 in your income tax return. Amendment for taxes Each year, until age 18, $324 (18. Amendment for taxes 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. Amendment for taxes Part-year payments. Amendment for taxes   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. Amendment for taxes   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. Amendment for taxes 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. Amendment for taxes   If you received a fractional payment, follow Step 5, discussed earlier. Amendment for taxes This gives you the tax-free part of your total payment. Amendment for taxes Example. Amendment for taxes On September 28, Mary bought an annuity contract for $22,050 that will give her $125 a month for life, beginning October 30. Amendment for taxes The applicable multiple from Table V is 23. Amendment for taxes 3 (age 61). Amendment for taxes Her expected return is $34,950 ($125 × 12 × 23. Amendment for taxes 3). Amendment for taxes Mary's investment in the contract of $22,050, divided by her expected return of $34,950, equals 63. Amendment for taxes 1%. Amendment for taxes Each payment received will consist of 63. Amendment for taxes 1% return of cost and 36. Amendment for taxes 9% taxable income, until her net cost of the contract is fully recovered. Amendment for taxes During the first year, Mary received three payments of $125, or $375, of which $236. Amendment for taxes 63 (63. Amendment for taxes 1% × $375) is a return of cost. Amendment for taxes The remaining $138. Amendment for taxes 37 is included in income. Amendment for taxes Increase in annuity payments. Amendment for taxes   The tax-free amount remains the same as the amount figured at the annuity starting date, even if the payment increases. Amendment for taxes All increases in the installment payments are fully taxable. Amendment for taxes   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. Amendment for taxes 72-5(a)(5) of the regulations. Amendment for taxes Example. Amendment for taxes Joe's wife died while she was still employed and, as her beneficiary, he began receiving an annuity of $147 per month. Amendment for taxes In figuring the taxable part, Joe elects to use Tables V through VIII. Amendment for taxes The cost of the contract was $7,938, consisting of the sum of his wife's net contributions, adjusted for any refund feature. Amendment for taxes His expected return as of the annuity starting date is $35,280 (age 65, multiple of 20. Amendment for taxes 0 × $1,764 annual payment). Amendment for taxes The exclusion percentage is $7,938 ÷ $35,280, or 22. Amendment for taxes 5%. Amendment for taxes During the year he received 11 monthly payments of $147, or $1,617. Amendment for taxes Of this amount, 22. Amendment for taxes 5% × $147 × 11 ($363. Amendment for taxes 83) is tax free as a return of cost and the balance of $1,253. Amendment for taxes 17 is taxable. Amendment for taxes Later, because of a cost-of-living increase, his annuity payment was increased to $166 per month, or $1,992 a year (12 × $166). Amendment for taxes The tax-free part is still only 22. Amendment for taxes 5% of the annuity payments as of the annuity starting date (22. Amendment for taxes 5% × $147 × 12 = $396. Amendment for taxes 90 for a full year). Amendment for taxes The increase of $228 ($1,992 − $1,764 (12 × $147)) is fully taxable. Amendment for taxes Variable annuities. Amendment for taxes   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. Amendment for taxes   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. Amendment for taxes If the annuity is for life, you determine the total number of payments by using a multiple from the appropriate actuarial table. Amendment for taxes Example. Amendment for taxes Frank purchased a variable annuity at age 65. Amendment for taxes The total cost of the contract was $12,000. Amendment for taxes The annuity starting date is January 1 of the year of purchase. Amendment for taxes His annuity will be paid, starting July 1, in variable annual installments for his life. Amendment for taxes 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. Amendment for taxes   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. Amendment for taxes 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. Amendment for taxes The result is added to the previously figured periodic tax-free part. Amendment for taxes The sum is the amount of each future payment that will be tax free. Amendment for taxes Example. Amendment for taxes 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. Amendment for taxes Frank does not pay tax on the $500 (second year) payment because $600 of each annual pension payment is tax free. Amendment for taxes 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. Amendment for taxes 00 Amount received in second year 500. Amendment for taxes 00 Difference $100. Amendment for taxes 00 Number of remaining payments after the first 2 payments (age 67, from Table V) 18. Amendment for taxes 4 Amount to be added to previously determined annual tax-free part ($100 ÷ 18. Amendment for taxes 4) $5. Amendment for taxes 43 Revised annual tax-free part for third and later years ($600 + $5. Amendment for taxes 43) $605. Amendment for taxes 43 Amount taxable in third year ($1,200 − $605. Amendment for taxes 43) $594. Amendment for taxes 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. Amendment for taxes 72–4(d)(3) of the Income Tax Regulations. Amendment for taxes The statement must also show the following information: The annuity starting date and your age on that date. Amendment for taxes The first day of the first period for which you received an annuity payment in the current year. Amendment for taxes Your investment in the contract as originally figured. Amendment for taxes 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. Amendment for taxes Exclusion Limits Your annuity starting date determines the total amount of annuity income that you can exclude from income over the years. Amendment for taxes Exclusion limited to net cost. Amendment for taxes   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). Amendment for taxes This is the unrecovered investment in the contract as of the annuity starting date. Amendment for taxes   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. Amendment for taxes This deduction is not subject to the 2%-of-adjusted-gross-income limit. Amendment for taxes Example 1. Amendment for taxes Your annuity starting date is after 1986. Amendment for taxes Your total cost is $12,500, and your net cost is $10,000, taking into account certain adjustments. Amendment for taxes There is no refund feature. Amendment for taxes Your monthly annuity payment is $833. Amendment for taxes 33. Amendment for taxes Your exclusion ratio is 12% and you exclude $100 a month. Amendment for taxes Your exclusion ends after 100 months, when you have excluded your net cost of $10,000. Amendment for taxes Thereafter, your annuity payments are fully taxable. Amendment for taxes Example 2. Amendment for taxes 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. Amendment for taxes The adjustment for the refund feature is $1,000, so the investment in the contract is $9,000. Amendment for taxes The exclusion ratio is 10. Amendment for taxes 8%, and your monthly exclusion is $90. Amendment for taxes After 5 years (60 months), you have recovered tax free only $5,400 ($90 x 60). Amendment for taxes 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. Amendment for taxes Your unrecovered investment is determined without regard to the refund feature adjustment, discussed earlier, under Adjustments. Amendment for taxes Exclusion not limited to net cost. Amendment for taxes   If your annuity starting date was before 1987, you could continue to take your monthly exclusion for as long as you receive your annuity. Amendment for taxes If you choose a joint and survivor annuity, your survivor continues to take the survivor's exclusion figured as of the annuity starting date. Amendment for taxes The total exclusion may be more than your investment in the contract. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes These tables correspond to the old Tables I through IV. Amendment for taxes In general, Tables V through VIII must be used if you made contributions to the retirement plan after June 30, 1986. Amendment for taxes If you made no contributions to the plan after June 30, 1986, generally you must use only Tables I through IV. Amendment for taxes 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). Amendment for taxes 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. Amendment for taxes Contributions made both before July 1986 and after June 1986. Amendment for taxes   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. Amendment for taxes (See the examples below. Amendment for taxes )    Making the election. Amendment for taxes 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. Amendment for taxes 72–6 of the Income Tax Regulations. Amendment for taxes ”   The statement must also include your name, address, social security number, and the amount of the pre-July 1986 investment in the contract. Amendment for taxes   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. Amendment for taxes 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. Amendment for taxes    Advantages of election. Amendment for taxes 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. Amendment for taxes    If you intend to make this election, save your records that substantiate your pre-July 1986 and post-June 1986 contributions. Amendment for taxes 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. Amendment for taxes   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. Amendment for taxes Example 1. Amendment for taxes Bill, who is single, contributed $42,000 to the retirement plan and will receive an annual annuity of $24,000 for life. Amendment for taxes Payment of the $42,000 contribution is guaranteed under a refund feature. Amendment for taxes Bill is 55 years old as of the annuity starting date. Amendment for taxes 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. Amendment for taxes       Pre- July 1986   Post- June 1986 A. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes Expected return         1) Annual annuity receivable $24,000   $24,000   2) Multiples from Tables I and V 21. Amendment for taxes 7   28. Amendment for taxes 6   3) Expected return, C(1) × C(2) $520,800   $686,400 D. Amendment for taxes Tax-free part of annuity         1) Exclusion ratio as decimal,  B(3) ÷ C(3) . Amendment for taxes 079   . Amendment for taxes 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). Amendment for taxes The taxable part of his annuity is $22,080 ($24,000 minus $1,920). Amendment for taxes 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). Amendment for taxes Example 2. Amendment for taxes Al is age 62 at his nearest birthday to the annuity starting date. Amendment for taxes Al's wife is age 60 at her nearest birthday to the annuity starting date. Amendment for taxes 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. Amendment for taxes The pre-July 1986 investment in the contract is $53,100 and the post-June 1986 investment in the contract is $7,000. Amendment for taxes Al makes the election described in Example 1 . Amendment for taxes For purposes of this example, assume the refund feature adjustment is zero. Amendment for taxes If an adjustment is required, IRS will figure the amount. Amendment for taxes See Requesting a Ruling on Taxation of Annuity near the end of this publication. Amendment for taxes       Pre-  July 1986   Post-  June 1986 A. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes Expected return         1) Multiple for both annuitants from Tables II and VI 25. Amendment for taxes 4   28. Amendment for taxes 8   2) Multiple for first annuitant from Tables I and V 16. Amendment for taxes 9   22. Amendment for taxes 5   3) Multiple applicable to surviving annuitant, subtract C(2) from C(1) 8. Amendment for taxes 5   6. Amendment for taxes 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. Amendment for taxes Tax-free part of annuity         1) Exclusion ratio as a decimal, B(3) ÷ C(8) . Amendment for taxes 209   . Amendment for taxes 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). Amendment for taxes The taxable part of his annuity is $9,216 ($12,000 − $2,784). Amendment for taxes 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. Amendment for taxes After Al's death, his widow will apply the same exclusion percentages (20. Amendment for taxes 9% and 2. Amendment for taxes 3%) to her annual annuity of $6,000 to figure the tax-free part of her annuity. Amendment for taxes Annuity received after June 30, 1986. Amendment for taxes   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. Amendment for taxes Once made, you cannot revoke the election, which will apply to all payments during the year and in any later year. Amendment for taxes    Make the election by attaching the following statement to your income tax return. Amendment for taxes    “I elect, under section 1. Amendment for taxes 72–9 of the Income Tax Regulations, to treat my entire cost of the contract as a post-June 1986 cost of the plan. Amendment for taxes ”   The statement must also include your name, address, and social security number. Amendment for taxes   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. Amendment for taxes Disqualifying form of payment or settlement. Amendment for taxes   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. Amendment for taxes See regulations section 1. Amendment for taxes 72–6(d)(3) for additional examples of disqualifying forms of payment or settlement. Amendment for taxes You can find the Income Tax Regulations in many libraries and at Internal Revenue Service Offices. Amendment for taxes Worksheets for Determining Taxable Annuity Worksheets I and II. Amendment for taxes   Worksheets I and II follow for determining your taxable annuity under Regulations Section 1. Amendment for taxes 72–6(d)(6) Election. Amendment for taxes Worksheet I For Determining Taxable Annuity Under Regulations Section 1. Amendment for taxes 72-6(d)(6) Election For Single Annuitant With No Survivor Annuity               Pre-July 1986   Post-June 1986 A. Amendment for taxes   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. Amendment for taxes )             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. Amendment for taxes If not, the IRS will calculate the refund feature percentage. Amendment for taxes             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. Amendment for taxes   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. Amendment for taxes   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. Amendment for taxes   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. Amendment for taxes     Worksheet II For Determining Taxable Annuity Under Regulations Section 1. Amendment for taxes 72-6(d)(6) Election For Joint and Survivor Annuity               Pre-July 1986   Post-June 1986 A. Amendment for taxes   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. Amendment for taxes )             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. Amendment for taxes If not, the IRS will calculate the refund feature percentage. Amendment for taxes             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. Amendment for taxes   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. Amendment for taxes   Expected Return             1)   Multiples for both annuitants, Tables II and VI             2)   Multiple for retiree. Amendment for taxes 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. Amendment for taxes   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. Amendment for taxes   Actuarial Tables Please click here for the text description of the image. Amendment for taxes Actuarial Tables Please click here for the text description of the image. Amendment for taxes Actuarial Tables Please click here for the text description of the image. Amendment for taxes Actuarial tables Please click here for the text description of the image. 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Amendment for taxes 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. Amendment for taxes If you make this request, you are asking for a ruling. Amendment for taxes User fee. Amendment for taxes   Under the law in effect at the time this publication went to print, the IRS must charge a user fee for all ruling requests. Amendment for taxes You should call the IRS for the proper fee. Amendment for taxes A request solely for the value of the refund feature is not treated as a ruling request and requires no fee. Amendment for taxes Send your request to:     Internal Revenue Service  Attention: EP Letter Rulings P. Amendment for taxes O. Amendment for taxes 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. Amendment for taxes When to make the request. Amendment for taxes   Please note that requests sent between February 1 and April 15 may experience some delay. Amendment for taxes We process requests in the order received, and we will reply to your request as soon as we can process it. Amendment for taxes 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. Amendment for taxes S. Amendment for taxes Individual Income Tax Return, to get an extension of time to file. Amendment for taxes Information you must furnish. Amendment for taxes   You must furnish the information listed below so the IRS can comply with your request. Amendment for taxes Failure to furnish the information will result in a delay in processing your request. Amendment for taxes 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. Amendment for taxes Copies of any documents showing distributions, annuity rates, and annuity options available to you. Amendment for taxes A copy of any Form 1099–R you received since your annuity began. Amendment for taxes A statement indicating whether you have filed your return for the year for which you are making the request. Amendment for taxes If you have requested an extension of time to file that return, please indicate the extension date. Amendment for taxes Your daytime phone number. Amendment for taxes Your current mailing address. Amendment for taxes A power of attorney if someone other than you, an attorney, a certified public accountant, or an enrolled agent is signing this request. Amendment for taxes Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose. Amendment for taxes A completed Tax Information Sheet (or facsimile) shown on the next page. Amendment for taxes Sign and date the Disclosure and Perjury Statement (or facsimile) at the end of the tax information sheet. Amendment for taxes This statement must be signed by the retiree or the survivor annuitant. Amendment for taxes It cannot be signed by a representative. Amendment for taxes Tax Information Sheet Please click here for the text description of the image. Amendment for taxes Tax Information Sheet Please click here for the text description of the image. Amendment for taxes 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. Amendment for taxes Free help with your tax return. Amendment for taxes   You can get free help preparing your return nationwide from IRS-certified volunteers. Amendment for taxes The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Amendment for taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Amendment for taxes 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. Amendment for taxes In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Amendment for taxes To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Amendment for taxes gov, download the IRS2Go app, or call 1-800-906-9887. Amendment for taxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. Amendment for taxes To find the nearest AARP Tax-Aide site, visit AARP's website at www. Amendment for taxes aarp. Amendment for taxes org/money/taxaide or call 1-888-227-7669. Amendment for taxes For more information on these programs, go to IRS. Amendment for taxes gov and enter “VITA” in the search box. Amendment for taxes Internet. Amendment for taxes    IRS. Amendment for taxes gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Amendment for taxes Download the free IRS2Go app from the iTunes app store or from Google Play. Amendment for taxes 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. Amendment for taxes Check the status of your 2013 refund with the Where's My Refund? application on IRS. Amendment for taxes gov or download the IRS2Go app and select the Refund Status option. Amendment for taxes The IRS issues more than 9 out of 10 refunds in less than 21 days. Amendment for taxes 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. Amendment for taxes You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Amendment for taxes The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Amendment for taxes Use the Interactive Tax Assistant (ITA) to research your tax questions. Amendment for taxes No need to wait on the phone or stand in line. Amendment for taxes 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. Amendment for taxes When you reach the response screen, you can print the entire interview and the final response for your records. Amendment for taxes New subject areas are added on a regular basis. Amendment for taxes  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Amendment for taxes gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Amendment for taxes You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Amendment for taxes The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Amendment for taxes 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. Amendment for taxes 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. Amendment for taxes You can also ask the IRS to mail a return or an account transcript to you. Amendment for taxes Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Amendment for taxes gov or by calling 1-800-908-9946. Amendment for taxes Tax return and tax account transcripts are generally available for the current year and the past three years. Amendment for taxes Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Amendment for taxes Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Amendment for taxes 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. Amendment for taxes Check the status of your amended return using Where's My Amended Return? Go to IRS. Amendment for taxes gov and enter Where's My Amended Return? in the search box. Amendment for taxes You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Amendment for taxes It can take up to 3 weeks from the date you mailed it to show up in our system. Amendment for taxes Make a payment using one of several safe and convenient electronic payment options available on IRS. Amendment for taxes gov. Amendment for taxes Select the Payment tab on the front page of IRS. Amendment for taxes gov for more information. Amendment for taxes Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Amendment for taxes Figure your income tax withholding with the IRS Withholding Calculator on IRS. Amendment for taxes gov. Amendment for taxes 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. Amendment for taxes Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Amendment for taxes gov. Amendment for taxes Request an Electronic Filing PIN by going to IRS. Amendment for taxes gov and entering Electronic Filing PIN in the search box. Amendment for taxes Download forms, instructions and publications, including accessible versions for people with disabilities. Amendment for taxes Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Amendment for taxes gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Amendment for taxes An employee can answer questions about your tax account or help you set up a payment plan. Amendment for taxes Before you visit, check the Office Locator on IRS. Amendment for taxes gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Amendment for taxes If you have a special need, such as a disability, you can request an appointment. Amendment for taxes Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Amendment for taxes Apply for an Employer Identification Number (EIN). Amendment for taxes Go to IRS. Amendment for taxes gov and enter Apply for an EIN in the search box. Amendment for taxes Read the Internal Revenue Code, regulations, or other official guidance. Amendment for taxes Read Internal Revenue Bulletins. Amendment for taxes Sign up to receive local and national tax news and more by email. Amendment for taxes Just click on “subscriptions” above the search box on IRS. Amendment for taxes gov and choose from a variety of options. Amendment for taxes    Phone. Amendment for taxes You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Amendment for taxes Download the free IRS2Go app from the iTunes app store or from Google Play. Amendment for taxes Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Amendment for taxes gov, or download the IRS2Go app. Amendment for taxes 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. Amendment for taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Amendment for taxes Mos