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1040x Amended Form

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1040x Amended Form

1040x amended form 2. 1040x amended form   Taxable and Nontaxable Income Table of Contents Compensation for Services Retirement Plan DistributionsIndividual Retirement Arrangements (IRAs) Pensions and Annuities Social Security and Equivalent Railroad Retirement BenefitsAre Any of Your Benefits Taxable? How Much Is Taxable? How To Report Your Benefits Lump-Sum Election Repayments More Than Gross Benefits Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Life Insurance ProceedsInstallments for life. 1040x amended form Surviving spouse. 1040x amended form Endowment Contract Proceeds Accelerated Death Benefits Sale of HomeMaximum Amount of Exclusion Ownership and Use Tests Married Persons Business Use or Rental of Home Reporting the Sale Reverse Mortgages Other ItemsWelfare benefits. 1040x amended form Payments from a state fund for victims of crime. 1040x amended form Home Affordable Modification Program (HAMP). 1040x amended form Mortgage assistance payments. 1040x amended form Payments to reduce cost of winter energy use. 1040x amended form Nutrition Program for the Elderly. 1040x amended form Reemployment Trade Adjustment Assistance (RTAA). 1040x amended form Generally, income is taxable unless it is specifically exempt (not taxed) by law. 1040x amended form Your taxable income may include compensation for services, interest, dividends, rents, royalties, income from partnerships, estate or trust income, gain from sales or exchanges of property, and business income of all kinds. 1040x amended form Under special provisions of the law, certain items are partially or fully exempt from tax. 1040x amended form Provisions that are of special interest to older taxpayers are discussed in this chapter. 1040x amended form Compensation for Services Generally, you must include in gross income everything you receive in payment for personal services. 1040x amended form In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. 1040x amended form You need not receive the compensation in cash for it to be taxable. 1040x amended form Payments you receive in the form of goods or services generally must be included in gross income at their fair market value. 1040x amended form Volunteer work. 1040x amended form   Do not include in your gross income amounts you receive for supportive services or reimbursements for out-of-pocket expenses under any of the following volunteer programs. 1040x amended form Retired Senior Volunteer Program (RSVP). 1040x amended form Foster Grandparent Program. 1040x amended form Senior Companion Program. 1040x amended form Service Corps of Retired Executives (SCORE). 1040x amended form Unemployment compensation. 1040x amended form   You must include in income all unemployment compensation you or your spouse (if married filing jointly) received. 1040x amended form More information. 1040x amended form   See Publication 525, Taxable and Nontaxable Income, for more detailed information on specific types of income. 1040x amended form Retirement Plan Distributions This section summarizes the tax treatment of amounts you receive from traditional individual retirement arrangements (IRA), employee pensions or annuities, and disability pensions or annuities. 1040x amended form A traditional IRA is any IRA that is not a Roth or SIMPLE IRA. 1040x amended form A Roth IRA is an individual retirement plan that can be either an account or an annuity and features nondeductible contributions and tax-free distributions. 1040x amended form A SIMPLE IRA is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. 1040x amended form More detailed information can be found in Publication 590, Individual Retirement Arrangements (IRAs), and Publication 575, Pension and Annuity Income. 1040x amended form Individual Retirement Arrangements (IRAs) In general, distributions from a traditional IRA are taxable in the year you receive them. 1040x amended form Exceptions to the general rule are rollovers, tax-free withdrawals of contributions, and the return of nondeductible contributions. 1040x amended form These are discussed in Publication 590. 1040x amended form If you made nondeductible contributions to a traditional IRA, you must file Form 8606, Nondeductible IRAs. 1040x amended form If you do not file Form 8606 with your return, you may have to pay a $50 penalty. 1040x amended form Also, when you receive distributions from your traditional IRA, the amounts will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. 1040x amended form Early distributions. 1040x amended form   Generally, early distributions are amounts distributed from your traditional IRA account or annuity before you are age 59½, or amounts you receive when you cash in retirement bonds before you are age  59½. 1040x amended form You must include early distributions of taxable amounts in your gross income. 1040x amended form These taxable amounts are also subject to an additional 10% tax unless the distribution qualifies for an exception. 1040x amended form For purposes of the additional 10% tax, an IRA is a qualified retirement plan. 1040x amended form For more information about this tax, see Tax on Early Distributions under Pensions and Annuities, later. 1040x amended form After age 59½ and before age 70½. 1040x amended form   After you reach age 59½, you can receive distributions from your traditional IRA without having to pay the 10% additional tax. 1040x amended form Even though you can receive distributions after you reach age 59½, distributions are not required until you reach  age 70½. 1040x amended form Required distributions. 1040x amended form   If you are the owner of a traditional IRA, you generally must receive the entire balance in your IRA or start receiving periodic distributions from your IRA by April 1 of the year following the year in which you reach age 70½. 1040x amended form See When Must You Withdraw Assets? (Required Minimum Distributions) in Publication 590. 1040x amended form If distributions from your traditional IRA(s) are less than the required minimum distribution for the year, you may have to pay a 50% excise tax for that year on the amount not distributed as required. 1040x amended form For purposes of the 50% excise tax, an IRA is a qualified retirement plan. 1040x amended form For more information about this tax, see Tax on Excess Accumulation under Pensions and Annuities, later. 1040x amended form See also Excess Accumulations (Insufficient Distributions) in Publication 590. 1040x amended form Pensions and Annuities Generally, if you did not pay any part of the cost of your employee pension or annuity, and your employer did not withhold part of the cost of the contract from your pay while you worked, the amounts you receive each year are fully taxable. 1040x amended form However, see Insurance Premiums for Retired Public Safety Officers , later. 1040x amended form If you paid part of the cost of your pension or annuity plan (see Cost , later), you can exclude part of each annuity payment from income as a recovery of your cost (investment in the contract). 1040x amended form This tax-free part of the payment is figured when your annuity starts and remains the same each year, even if the amount of the payment changes. 1040x amended form The rest of each payment is taxable. 1040x amended form However, see Insurance Premiums for Retired Public Safety Officers , later. 1040x amended form You figure the tax-free part of the payment using one of the following methods. 1040x amended form Simplified Method. 1040x amended form You generally must use this method if your annuity is paid under a qualified plan (a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan or contract). 1040x amended form You cannot use this method if your annuity is paid under a nonqualified plan. 1040x amended form General Rule. 1040x amended form You must use this method if your annuity is paid under a nonqualified plan. 1040x amended form You generally cannot use this method if your annuity is paid under a qualified plan. 1040x amended form Contact your employer or plan administrator to find out if your pension or annuity is paid under a qualified or nonqualified plan. 1040x amended form You determine which method to use when you first begin receiving your annuity, and you continue using it each year that you recover part of your cost. 1040x amended form Exclusion limit. 1040x amended form   If your annuity starting date is after 1986, the total amount of annuity income you can exclude over the years as a recovery of the cost cannot exceed your total cost. 1040x amended form Any unrecovered cost at your (or the last annuitant's) death is allowed as a miscellaneous itemized deduction on the final return of the decedent. 1040x amended form This deduction is not subject to the 2%-of-adjusted-gross-income limit on miscellaneous deductions. 1040x amended form   If you contributed to your pension or annuity and your annuity starting date is before 1987, you can continue to take your monthly exclusion for as long as you receive your annuity. 1040x amended form If you chose a joint and survivor annuity, your survivor can continue to take the survivor's exclusion figured as of the annuity starting date. 1040x amended form The total exclusion may be more than your cost. 1040x amended form Cost. 1040x amended form   Before you can figure how much, if any, of your pension or annuity benefits are taxable, you must determine your cost in the plan (your investment in the contract). 1040x amended form Your total cost in the plan includes everything that you paid. 1040x amended form It also includes amounts your employer contributed that were taxable to you when paid. 1040x amended form However, see Foreign employment contributions , later. 1040x amended form   From this total cost, subtract any refunded premiums, rebates, dividends, unrepaid loans, or other tax-free amounts you received by the later of the annuity starting date or the date on which you received your first payment. 1040x amended form   The annuity starting date is the later of the first day of the first period for which you received a payment from the plan or the date on which the plan's obligations became fixed. 1040x amended form    The amount of your contributions to the plan may be shown in box 9b of any Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1040x amended form , that you receive. 1040x amended form Foreign employment contributions. 1040x amended form   If you worked abroad, certain amounts your employer paid into your retirement plan that were not includible in your gross income may be considered part of your cost. 1040x amended form For details, see Foreign employment contributions in Publication 575. 1040x amended form Withholding. 1040x amended form   The payer of your pension, profit-sharing, stock bonus, annuity, or deferred compensation plan will withhold income tax on the taxable part of amounts paid to you. 1040x amended form However, you can choose not to have tax withheld on the payments you receive, unless they are eligible rollover distributions. 1040x amended form (These are distributions that are eligible for rollover treatment but are not paid directly to another qualified retirement plan or to a traditional IRA. 1040x amended form ) See Withholding Tax and Estimated Tax and Rollovers in Publication 575 for more information. 1040x amended form   For payments other than eligible rollover distributions, you can tell the payer how much to withhold by filing a Form W-4P, Withholding Certificate for Pension or Annuity Payments. 1040x amended form Simplified Method. 1040x amended form   Under the Simplified Method, you figure the tax-free part of each annuity payment by dividing your cost by the total number of anticipated monthly payments. 1040x amended form For an annuity that is payable over the lives of the annuitants, this number is based on the annuitants' ages on the annuity starting date and is determined from a table. 1040x amended form For any other annuity, this number is the number of monthly annuity payments under the contract. 1040x amended form Who must use the Simplified Method. 1040x amended form   You must use the Simplified Method if your annuity starting date is after November 18, 1996, and you receive your pension or annuity payments from a qualified plan or annuity, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments (defined next). 1040x amended form   In addition, if your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use the Simplified Method for payments from a qualified plan, unless you were at least 75 years old and entitled to at least 5 years of guaranteed payments. 1040x amended form If you chose to use the Simplified Method, you must continue to use it each year that you recover part of your cost. 1040x amended form Guaranteed payments. 1040x amended form   Your annuity contract provides guaranteed payments if a minimum number of payments or a minimum amount (for example, the amount of your investment) is payable even if you and any survivor annuitant do not live to receive the minimum. 1040x amended form If the minimum amount is less than the total amount of the payments you are to receive, barring death, during the first 5 years after payments begin (figured by ignoring any payment increases), you are entitled to less than 5 years of guaranteed payments. 1040x amended form Who cannot use the Simplified Method. 1040x amended form   You cannot use the Simplified Method and must use the General Rule if you receive pension or annuity payments from: A nonqualified plan, such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan, or A qualified plan if you are age 75 or older on your annuity starting date and you are entitled to at least 5 years of guaranteed payments (defined above). 1040x amended form   In addition, you had to use the General Rule for either circumstance described above if your annuity starting date is after July 1, 1986, and before November 19, 1996. 1040x amended form If you did not have to use the General Rule, you could have chosen to use it. 1040x amended form You also had to use the General Rule for payments from a qualified plan if your annuity starting date is before July 2, 1986, and you did not qualify to use the Three-Year Rule. 1040x amended form   If you had to use the General Rule (or chose to use it), you must continue to use it each year that you recover your cost. 1040x amended form   Unless your annuity starting date was before 1987, once you have recovered all of your non-taxable investment, all of each remaining payment you receive is fully taxable. 1040x amended form Once your remaining payments are fully taxable, there is no longer a concern with the General Rule or Simplified Method. 1040x amended form   Complete information on the General Rule, including the actuarial tables you need, is contained in Publication 939, General Rule for Pensions and Annuities. 1040x amended form How to use the Simplified Method. 1040x amended form   Complete the Simplified Method Worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions or in Publication 575 to figure your taxable annuity for 2013. 1040x amended form Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year. 1040x amended form   To complete line 3 of the worksheet, you must determine the total number of expected monthly payments for your annuity. 1040x amended form How you do this depends on whether the annuity is for a single life, multiple lives, or a fixed period. 1040x amended form For this purpose, treat an annuity that is payable over the life of an annuitant as payable for that annuitant's life even if the annuity has a fixed-period feature or also provides a temporary annuity payable to the annuitant's child under age 25. 1040x amended form    You do not need to complete line 3 of the worksheet or make the computation on line 4 if you received annuity payments last year and used last year's worksheet to figure your taxable annuity. 1040x amended form Instead, enter the amount from line 4 of last year's worksheet on line 4 of this year's worksheet. 1040x amended form Single-life annuity. 1040x amended form   If your annuity is payable for your life alone, use Table 1 at the bottom of the worksheet to determine the total number of expected monthly payments. 1040x amended form Enter on line 3 the number shown for your age on your annuity starting date. 1040x amended form This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 1040x amended form Multiple-lives annuity. 1040x amended form   If your annuity is payable for the lives of more than one annuitant, use Table 2 at the bottom of the worksheet to determine the total number of expected monthly payments. 1040x amended form Enter on line 3 the number shown for the annuitants' combined ages on the annuity starting date. 1040x amended form For an annuity payable to you as the primary annuitant and to more than one survivor annuitant, combine your age and the age of the youngest survivor annuitant. 1040x amended form For an annuity that has no primary annuitant and is payable to you and others as survivor annuitants, combine the ages of the oldest and youngest annuitants. 1040x amended form Do not treat as a survivor annuitant anyone whose entitlement to payments depends on an event other than the primary annuitant's death. 1040x amended form   However, if your annuity starting date is before 1998, do not use Table 2 and do not combine the annuitants' ages. 1040x amended form Instead, you must use Table 1 at the bottom of the worksheet and enter on line 3 the number shown for the primary annuitant's age on the annuity starting date. 1040x amended form This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 1040x amended form Fixed-period annuities. 1040x amended form   If your annuity does not depend in whole or in part on anyone's life expectancy, the total number of expected monthly payments to enter on line 3 of the worksheet is the number of monthly annuity payments under the contract. 1040x amended form Line 6. 1040x amended form   The amount on line 6 should include all amounts that could have been recovered in prior years. 1040x amended form If you did not recover an amount in a prior year, you may be able to amend your returns for the affected years. 1040x amended form    Be sure to keep a copy of the completed worksheet; it will help you figure your taxable annuity in later years. 1040x amended form Example. 1040x amended form Bill Smith, age 65, began receiving retirement benefits in 2013, under a joint and survivor annuity. 1040x amended form Bill's annuity starting date is January 1, 2013. 1040x amended form The benefits are to be paid over the joint lives of Bill and his wife, Kathy, age 65. 1040x amended form Bill had contributed $31,000 to a qualified plan and had received no distributions before the annuity starting date. 1040x amended form Bill is to receive a retirement benefit of $1,200 a month, and Kathy is to receive a monthly survivor benefit of $600 upon Bill's death. 1040x amended form Bill must use the Simplified Method to figure his taxable annuity because his payments are from a qualified plan and he is under age 75. 1040x amended form See the illustrated Worksheet 2-A, Simplified Method Worksheet, later. 1040x amended form You can find a blank version of this worksheet in Publication 575. 1040x amended form (The references in the illustrated worksheet are to sections in Publication 575). 1040x amended form His annuity is payable over the lives of more than one annuitant, so Bill uses his and Kathy's combined ages, 130 (65 + 65), and Table 2 at the bottom of the worksheet in completing line 3 of the worksheet and finds the line 3 amount to be 310. 1040x amended form Bill's tax-free monthly amount is $100 ($31,000 ÷ 310 as shown on line 4 of the worksheet). 1040x amended form Upon Bill's death, if Bill has not recovered the full $31,000 investment, Kathy will also exclude $100 from her $600 monthly payment. 1040x amended form The full amount of any annuity payments received after 310 payments are paid must generally be included in gross income. 1040x amended form If Bill and Kathy die before 310 payments are made, a miscellaneous itemized deduction will be allowed for the unrecovered cost on the final income tax return of the last to die. 1040x amended form This deduction is not subject to the 2%-of-adjusted-gross-income limit. 1040x amended form Worksheet 2-A. 1040x amended form Simplified Method Worksheet—Illustrated 1. 1040x amended form Enter the total pension or annuity payments received this year. 1040x amended form Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. 1040x amended form $ 14,400 2. 1040x amended form Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion* See Cost (Investment in the Contract), earlier 2. 1040x amended form 31,000   Note. 1040x amended form If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). 1040x amended form Otherwise, go to line 3. 1040x amended form     3. 1040x amended form Enter the appropriate number from Table 1 below. 1040x amended form But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below 3. 1040x amended form 310 4. 1040x amended form Divide line 2 by the number on line 3 4. 1040x amended form 100 5. 1040x amended form Multiply line 4 by the number of months for which this year's payments were made. 1040x amended form If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. 1040x amended form Otherwise, go to line 6 5. 1040x amended form 1,200 6. 1040x amended form Enter any amount previously recovered tax free in years after 1986. 1040x amended form This is the amount shown on line 10 of your worksheet for last year 6. 1040x amended form 0 7. 1040x amended form Subtract line 6 from line 2 7. 1040x amended form 31,000 8. 1040x amended form Enter the smaller of line 5 or line 7 8. 1040x amended form 1,200 9. 1040x amended form Taxable amount for year. 1040x amended form Subtract line 8 from line 1. 1040x amended form Enter the result, but not less than zero. 1040x amended form Also, add this amount to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 1040x amended form Note. 1040x amended form If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. 1040x amended form If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers, earlier, before entering an amount on your tax return. 1040x amended form 9. 1040x amended form $ 13,200 10. 1040x amended form Was your annuity starting date before 1987? □ Yes. 1040x amended form STOP. 1040x amended form Do not complete the rest of this worksheet. 1040x amended form  ☑ No. 1040x amended form Add lines 6 and 8. 1040x amended form This is the amount you have recovered tax free through 2013. 1040x amended form You will need this number if you need to fill out this worksheet next year. 1040x amended form 10. 1040x amended form 1,200 11. 1040x amended form Balance of cost to be recovered. 1040x amended form Subtract line 10 from line 2. 1040x amended form If zero, you will not have to complete this worksheet next year. 1040x amended form The payments you receive next year will generally be fully taxable 11. 1040x amended form $ 29,800 * A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996. 1040x amended form   Table 1 for Line 3 Above       AND your annuity starting date was—   IF your age on your annuity starting date was . 1040x amended form . 1040x amended form . 1040x amended form   BEFORE November 19, 1996, enter on line 3 . 1040x amended form . 1040x amended form . 1040x amended form AFTER November 18, 1996, enter on line 3 . 1040x amended form . 1040x amended form . 1040x amended form   55 or under 300 360   56-60 260 310   61-65 240 260   66-70 170 210   71 or over 120 160 Table 2 for Line 3 Above   IF the annuitants' combined ages on your annuity starting date were . 1040x amended form . 1040x amended form . 1040x amended form   THEN enter on line 3 . 1040x amended form . 1040x amended form . 1040x amended form         110 or under   410         111-120   360         121-130   310         131-140   260         141 or over   210       Survivors of retirees. 1040x amended form   Benefits paid to you as a survivor under a joint and survivor annuity must be included in your gross income in the same way the retiree would have included them in gross income. 1040x amended form   If you receive a survivor annuity because of the death of a retiree who had reported the annuity under the Three-Year Rule, include the total received in your income. 1040x amended form The retiree's cost has already been recovered tax free. 1040x amended form   If the retiree was reporting the annuity payments under the General Rule, you must apply the same exclusion percentage the retiree used to your initial payment called for in the contract. 1040x amended form The resulting tax-free amount will then remain fixed. 1040x amended form Any increases in the survivor annuity are fully taxable. 1040x amended form   If the retiree was reporting the annuity payments under the Simplified Method, the part of each payment that is tax free is the same as the tax-free amount figured by the retiree at the annuity starting date. 1040x amended form See Simplified Method , earlier. 1040x amended form How to report. 1040x amended form   If you file Form 1040, report your total annuity on line 16a, and the taxable part on line 16b. 1040x amended form If your pension or annuity is fully taxable, enter it on line 16b. 1040x amended form Do not make an entry on line 16a. 1040x amended form   If you file Form 1040A, report your total annuity on line 12a, and the taxable part on line 12b. 1040x amended form If your pension or annuity is fully taxable, enter it on line 12b. 1040x amended form Do not make an entry on line 12a. 1040x amended form   If you file Form 1040NR, report your total annuity on line 17a, and the taxable part on line 17b. 1040x amended form If your pension or annuity is fully taxable, enter it on line 17b. 1040x amended form Do not make an entry on line 17a. 1040x amended form Example. 1040x amended form You are a Form 1040 filer and you received monthly payments totaling $1,200 (12 months x $100) during 2013 from a pension plan that was completely financed by your employer. 1040x amended form You had paid no tax on the payments that your employer made to the plan, and the payments were not used to pay for accident, health, or long-term care insurance premiums (as discussed later under Insurance Premiums for Retired Public Safety Officers ). 1040x amended form The entire $1,200 is taxable. 1040x amended form You include $1,200 only on Form 1040, line 16b. 1040x amended form Joint return. 1040x amended form   If you file a joint return and you and your spouse each receive one or more pensions or annuities, report the total of the pensions and annuities on line 16a of Form 1040, line 12a of Form 1040A, or line 17a of Form 1040NR. 1040x amended form Report the total of the taxable parts on line 16b of Form 1040, line 12b of Form 1040A, or line 17b of Form 1040NR. 1040x amended form Form 1099-R. 1040x amended form   You should receive a Form 1099-R for your pension or annuity. 1040x amended form Form 1099-R shows your pension or annuity for the year and any income tax withheld. 1040x amended form You should receive a Form W-2 if you receive distributions from certain nonqualified plans. 1040x amended form You must attach Forms 1099-R or Forms W-2 to your 2013 tax return if federal income tax was withheld. 1040x amended form Generally, you should be sent these forms by January 31, 2014. 1040x amended form Nonperiodic Distributions If you receive a nonperiodic distribution from your retirement plan, you may be able to exclude all or part of it from your income as a recovery of your cost. 1040x amended form Nonperiodic distributions include cash withdrawals, distributions of current earnings (dividends) on your investment, and certain loans. 1040x amended form For information on how to figure the taxable amount of a nonperiodic distribution, see Taxation of Nonperiodic Payments in Publication 575. 1040x amended form The taxable part of a nonperiodic distribution may be subject to an additional 10% tax. 1040x amended form See Tax on Early Distributions, later. 1040x amended form Lump-sum distributions. 1040x amended form   If you receive a lump-sum distribution from a qualified employee plan or qualified employee annuity and the plan participant was born before January 2, 1936, you may be able to elect optional methods of figuring the tax on the distribution. 1040x amended form The part from active participation in the plan before 1974 may qualify as capital gain subject to a 20% tax rate. 1040x amended form The part from participation after 1973 (and any part from participation before 1974 that you do not report as capital gain) is ordinary income. 1040x amended form You may be able to use the 10-year tax option to figure tax on the ordinary income part. 1040x amended form Form 1099-R. 1040x amended form   If you receive a total distribution from a plan, you should receive a Form 1099-R. 1040x amended form If the distribution qualifies as a lump-sum distribution, box 3 shows the capital gain part of the distribution. 1040x amended form The amount in box 2a, Taxable amount, minus the amount in box 3, Capital gain, is the ordinary income part. 1040x amended form More information. 1040x amended form   For more detailed information on lump-sum distributions, see Publication 575 or Form 4972, Tax on Lump-Sum Distributions. 1040x amended form Tax on Early Distributions Most distributions you receive from your qualified retirement plan and nonqualified annuity contracts before you reach age 59½ are subject to an additional tax of 10%. 1040x amended form The tax applies to the taxable part of the distribution. 1040x amended form For this purpose, a qualified retirement plan is: A qualified employee plan (including a qualified cash or deferred arrangement (CODA) under Internal Revenue Code section 401(k)), A qualified employee annuity plan, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan (to the extent that any distribution is attributable to amounts the plan received in a direct transfer or rollover from one of the other plans listed here or an IRA). 1040x amended form  An IRA is also a qualified retirement plan for purposes of this tax. 1040x amended form General exceptions to tax. 1040x amended form   The early distribution tax does not apply to any distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after separation from service), Made because you are totally and permanently disabled, or Made on or after the death of the plan participant or contract holder. 1040x amended form Additional exceptions. 1040x amended form   There are additional exceptions to the early distribution tax for certain distributions from qualified retirement plans and nonqualified annuity contracts. 1040x amended form See Publication 575 for details. 1040x amended form Reporting tax. 1040x amended form   If you owe only the tax on early distributions and distribution code 1 (early distribution, no known exception) is correctly shown in Form 1099-R, box 7, multiply the taxable part of the early distribution by 10% (. 1040x amended form 10) and enter the result on Form 1040, line 58, or Form 1040NR, line 56. 1040x amended form See the instructions for line 58 of Form 1040 or line 56 of Form 1040NR for more information about reporting the early distribution tax. 1040x amended form Tax on Excess Accumulation To make sure that most of your retirement benefits are paid to you during your lifetime, rather than to your beneficiaries after your death, the payments that you receive from qualified retirement plans must begin no later than your required beginning date. 1040x amended form Unless the rule for 5% owners applies, this is generally April 1 of the year that follows the later of: The calendar year in which you reach age 70½, or The calendar year in which you retire from employment with the employer maintaining the plan. 1040x amended form However, your plan may require you to begin to receive payments by April 1 of the year that follows the year in which you reach 70½, even if you have not retired. 1040x amended form For this purpose, a qualified retirement plan includes: A qualified employee plan, A qualified employee annuity plan, An eligible section 457 deferred compensation plan, or A tax-sheltered annuity plan (403(b) plan) (for benefits accruing after 1986). 1040x amended form  An IRA is also a qualified retirement plan for purposes of this tax. 1040x amended form An excess accumulation is the undistributed remainder of the required minimum distribution that was left in your qualified retirement plan. 1040x amended form 5% owners. 1040x amended form   If you own (or are considered to own under section 318 of the Internal Revenue Code) more than 5% of the company maintaining your qualified retirement plan, you must begin to receive distributions from the plan by April 1 of the year after the calendar year in which you reach age 70½. 1040x amended form See Publication 575 for more information. 1040x amended form Amount of tax. 1040x amended form   If you do not receive the required minimum distribution, you are subject to an additional tax. 1040x amended form The tax equals 50% of the difference between the amount that must be distributed and the amount that was distributed during the tax year. 1040x amended form You can get this excise tax excused if you establish that the shortfall in distributions was due to reasonable error and that you are taking reasonable steps to remedy the shortfall. 1040x amended form Form 5329. 1040x amended form   You must file a Form 5329 if you owe a tax because you did not receive a minimum required distribution from your qualified retirement plan. 1040x amended form Additional information. 1040x amended form   For more detailed information on the tax on excess accumulation, see Publication 575. 1040x amended form Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. 1040x amended form The premiums can be for coverage for you, your spouse, or dependent(s). 1040x amended form The distribution must be made directly from the plan to the insurance provider. 1040x amended form You can exclude from income the smaller of the amount of the insurance premiums or $3,000. 1040x amended form You can only make this election for amounts that would otherwise be included in your income. 1040x amended form The amount excluded from your income cannot be used to claim a medical expense deduction. 1040x amended form An eligible retirement plan is a governmental plan that is a: Qualified trust, Section 403(a) plan, Section 403(b) annuity, or Section 457(b) plan. 1040x amended form If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. 1040x amended form The taxable amount shown in box 2a of any Form 1099-R that you receive does not reflect the exclusion. 1040x amended form Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 1040x amended form Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 1040x amended form Enter “PSO” next to the appropriate line on which you report the taxable amount. 1040x amended form Railroad Retirement Benefits Benefits paid under the Railroad Retirement Act fall into two categories. 1040x amended form These categories are treated differently for income tax purposes. 1040x amended form Social security equivalent benefits. 1040x amended form   The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. 1040x amended form This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and is treated for tax purposes like social security benefits. 1040x amended form (See Social Security and Equivalent Railroad Retirement Benefits , later. 1040x amended form ) Non-social security equivalent benefits. 1040x amended form   The second category contains the rest of the tier 1 benefits, called the non-social security equivalent benefit (NSSEB). 1040x amended form It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. 1040x amended form This category of benefits is treated as an amount received from a qualified employee plan. 1040x amended form This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. 1040x amended form Vested dual benefits and supplemental annuity benefits are non-contributory pensions and are fully taxable. 1040x amended form More information. 1040x amended form   For more information about railroad retirement benefits, see Publication 575. 1040x amended form Military Retirement Pay Military retirement pay based on age or length of service is taxable and must be included in income as a pension on Form 1040, lines 16a and 16b; on Form 1040A, lines 12a and 12b; or on Form 1040NR, lines 17a and 17b. 1040x amended form But, certain military and government disability pensions that are based on a percentage of disability from active service in the Armed Forces of any country generally are not taxable. 1040x amended form For more information, including information about veterans' benefits and insurance, see Publication 525. 1040x amended form Social Security and Equivalent Railroad Retirement Benefits This discussion explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. 1040x amended form Social security benefits include monthly retirement, survivor, and disability benefits. 1040x amended form They do not include supplemental security income (SSI) payments, which are not taxable. 1040x amended form Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. 1040x amended form They commonly are called the social security equivalent benefit (SSEB) portion of tier 1 benefits. 1040x amended form If you received these benefits during 2013, you should have received a Form SSA-1099 or Form RRB-1099 (Form SSA-1042S or Form RRB-1042S if you are a nonresident alien), showing the amount of the benefits. 1040x amended form Are Any of Your Benefits Taxable? Note. 1040x amended form When the term “benefits” is used in this section, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. 1040x amended form  To find out whether any of your benefits may be taxable, compare the base amount for your filing status (explained later) with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. 1040x amended form When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. 1040x amended form S. 1040x amended form savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned in American Samoa or Puerto Rico by bona fide residents. 1040x amended form Figuring total income. 1040x amended form   To figure the total of one-half of your benefits plus your other income, use Worksheet 2-B. 1040x amended form If that total amount is more than your base amount, part of your benefits may be taxable. 1040x amended form If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. 1040x amended form Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. 1040x amended form If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. 1040x amended form If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. 1040x amended form Worksheet 2-B. 1040x amended form A Quick Way To Check if Your Benefits May Be Taxable A. 1040x amended form Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 1040x amended form Include  the full amount of any lump-sum benefit payments received in 2013, for 2013 and  earlier years. 1040x amended form (If you received more than one form, combine the amounts from box 5  and enter the total. 1040x amended form ) A. 1040x amended form     Note. 1040x amended form If the amount on line A is zero or less, stop here; none of your benefits are  taxable this year. 1040x amended form     B. 1040x amended form Enter one-half of the amount on line A B. 1040x amended form   C. 1040x amended form Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 1040x amended form   D. 1040x amended form Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income for: •Interest from qualified U. 1040x amended form S. 1040x amended form savings bonds, •Employer-provided adoption benefits, •Foreign earned income or foreign housing, or •Income earned in American Samoa or Puerto Rico by bona fide residents D. 1040x amended form   E. 1040x amended form Add lines B, C, and D and enter the total E. 1040x amended form   F. 1040x amended form If you are: •Married filing jointly, enter $32,000 •Single, head of household, qualifying widow(er), or married filing separately and you  lived apart from your spouse for all of 2013, enter $25,000 •Married filing separately and you lived with your spouse at any time during 2013,  enter -0- F. 1040x amended form   G. 1040x amended form Is the amount on line F less than or equal to the amount on line E? □ No. 1040x amended form None of your benefits are taxable this year. 1040x amended form  □ Yes. 1040x amended form Some of your benefits may be taxable. 1040x amended form To figure how much of your benefits  are taxable, see Which worksheet to use under How Much Is Taxable. 1040x amended form     Base Amount Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er) with dependent child, $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $0 if you are married filing separately and lived with your spouse at any time during 2013. 1040x amended form Repayment of Benefits Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. 1040x amended form It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. 1040x amended form If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. 1040x amended form Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. 1040x amended form Your repayments are shown in box 4. 1040x amended form The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). 1040x amended form Use the amount in box 5 to figure whether any of your benefits are taxable. 1040x amended form Tax Withholding and Estimated Tax You can choose to have federal income tax withheld from your social security and/or the SSEB portion of your tier 1 railroad retirement benefits. 1040x amended form If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Request. 1040x amended form If you do not choose to have income tax withheld, you may have to request additional withholding from other income, or pay estimated tax during the year. 1040x amended form For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. 1040x amended form How Much Is Taxable? If part of your benefits is taxable, how much is taxable depends on the total amount of your benefits and other income. 1040x amended form Generally, the higher that total amount, the greater the taxable part of your benefits. 1040x amended form Maximum taxable part. 1040x amended form   The taxable part of your benefits usually cannot be more than 50%. 1040x amended form However, up to 85% of your benefits can be taxable if either of the following situations applies to you. 1040x amended form The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). 1040x amended form You are married filing separately and lived with your spouse at any time during 2013. 1040x amended form   If you are a nonresident alien, 85% of your benefits are taxable. 1040x amended form However, this income is exempt under some tax treaties. 1040x amended form Which worksheet to use. 1040x amended form   A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. 1040x amended form However, you will need to use a different worksheet(s) if any of the following situations applies to you. 1040x amended form You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse were covered by a retirement plan at work. 1040x amended form In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. 1040x amended form Situation (1) does not apply and you take one or more of the following exclusions. 1040x amended form Interest from qualified U. 1040x amended form S. 1040x amended form savings bonds (Form 8815). 1040x amended form Employer-provided adoption benefits (Form 8839). 1040x amended form Foreign earned income or housing (Form 2555 or Form 2555-EZ). 1040x amended form Income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. 1040x amended form In these situations, you must use Worksheet 1 in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure your taxable benefits. 1040x amended form You received a lump-sum payment for an earlier year. 1040x amended form In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. 1040x amended form See Lump-Sum Election , later. 1040x amended form How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040, Form 1040A, or Form 1040NR. 1040x amended form You cannot use Form 1040EZ. 1040x amended form Reporting on Form 1040. 1040x amended form   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 20a and the taxable part on line 20b. 1040x amended form If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. 1040x amended form Reporting on Form 1040A. 1040x amended form   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 14a and the taxable part on line 14b. 1040x amended form If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. 1040x amended form Reporting on Form 1040NR. 1040x amended form   Report 85% of the total amount of your benefits (box 5 of your Form SSA-1042S or Form RRB-1042S) in the appropriate column of Form 1040NR, Schedule NEC, line 8. 1040x amended form Benefits not taxable. 1040x amended form   If you are filing Form 1040EZ, do not report any benefits on your tax return. 1040x amended form If you are filing Form 1040 or Form 1040A, report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. 1040x amended form Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 1040x amended form If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. 1040x amended form Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. 1040x amended form This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. 1040x amended form No part of the lump-sum death benefit is subject to tax. 1040x amended form For more information about the lump-sum death benefit, visit the Social Security Administration website at www. 1040x amended form SSA. 1040x amended form gov, and use keyword: death benefit. 1040x amended form Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. 1040x amended form However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. 1040x amended form You can elect this method if it lowers your taxable benefits. 1040x amended form See Publication 915 for more information. 1040x amended form Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. 1040x amended form If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. 1040x amended form If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. 1040x amended form If you have any questions about this negative figure, contact your local Social Security Administration office or your local U. 1040x amended form S. 1040x amended form Railroad Retirement Board field office. 1040x amended form Joint return. 1040x amended form   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5 but your spouse's does not, subtract the box 5 amount on your form from the box 5 amount on your spouse's form. 1040x amended form You do this to get your net benefits when figuring if your combined benefits are taxable. 1040x amended form Repayment of benefits received in an earlier year. 1040x amended form   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. 1040x amended form   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. 1040x amended form Claim it on Schedule A (Form 1040), line 23. 1040x amended form   If this deduction is more than $3,000, you have to follow some special instructions. 1040x amended form See Publication 915 for those instructions. 1040x amended form Sickness and Injury Benefits Generally, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. 1040x amended form If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. 1040x amended form However, certain payments may not be taxable to you. 1040x amended form Some of these payments are discussed later in this section. 1040x amended form Also, see Military and Government Disability Pensions and Other Sickness and Injury Benefits in Publication 525. 1040x amended form Cost paid by you. 1040x amended form   If you pay the entire cost of an accident or health plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. 1040x amended form If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. 1040x amended form Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. 1040x amended form You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A or on line 8 of Form 1040NR until you reach minimum retirement age. 1040x amended form Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. 1040x amended form If you were 65 or older by the end of 2013 or you were retired on permanent and total disability and received taxable disability income, you may be able to claim the credit for the elderly or the disabled. 1040x amended form See Credit for the Elderly or the Disabled, later. 1040x amended form For more information on this credit, see Publication 524, Credit for the Elderly or the Disabled. 1040x amended form Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. 1040x amended form Report the payments on lines 16a and 16b of Form 1040, on lines 12a and 12b of Form 1040A, or on lines 17a and 17b of Form 1040NR. 1040x amended form For more information on pensions and annuities, see Publication 575. 1040x amended form Retirement and profit-sharing plans. 1040x amended form   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. 1040x amended form The payments must be reported as a pension or annuity. 1040x amended form Accrued leave payment. 1040x amended form   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. 1040x amended form The payment is not a disability payment. 1040x amended form Include it in your income in the tax year you receive it. 1040x amended form Long-Term Care Insurance Contracts In most cases, long-term care insurance contracts generally are treated as accident and health insurance contracts. 1040x amended form Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. 1040x amended form However, the amount you can exclude may be limited. 1040x amended form Long-term care insurance contracts are discussed in more detail in Publication 525. 1040x amended form Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. 1040x amended form The exemption also applies to your survivors. 1040x amended form The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. 1040x amended form If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. 1040x amended form For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. 1040x amended form Return to work. 1040x amended form   If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. 1040x amended form Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. 1040x amended form Federal Employees' Compensation Act (FECA). 1040x amended form   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. 1040x amended form However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. 1040x amended form Report this income on Form 1040, line 7; Form 1040A, line 7; on Form 1040EZ, line 1; or Form 1040NR, line 8. 1040x amended form Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. 1040x amended form    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. 1040x amended form For a discussion of the taxability of these benefits, see Social Security and Equivalent Railroad Retirement Benefits, earlier. 1040x amended form Other compensation. 1040x amended form   Many other amounts you receive as compensation for sickness or injury are not taxable. 1040x amended form These include the following amounts. 1040x amended form Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. 1040x amended form Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. 1040x amended form Compensation you receive for permanent loss or loss of use of a part or function of your body, for your permanent disfigurement, or for such loss or disfigurement suffered by your spouse or dependent(s). 1040x amended form This compensation must be based only on the injury and not on the period of your absence from work. 1040x amended form These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. 1040x amended form Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. 1040x amended form This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. 1040x amended form Proceeds not received in installments. 1040x amended form   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. 1040x amended form If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. 1040x amended form Proceeds received in installments. 1040x amended form   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. 1040x amended form   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. 1040x amended form Include anything over this excluded part in your income as interest. 1040x amended form Installments for life. 1040x amended form   If, as the beneficiary under an insurance contract, you are entitled to receive the proceeds in installments for the rest of your life without a refund or period-certain guarantee, you figure the excluded part of each installment by dividing the amount held by the insurance company by your life expectancy. 1040x amended form If there is a refund or period-certain guarantee, the amount held by the insurance company for this purpose is reduced by the actuarial value of the guarantee. 1040x amended form Surviving spouse. 1040x amended form   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude, in any year, up to $1,000 of the interest included in the installments. 1040x amended form If you remarry, you can continue to take the exclusion. 1040x amended form Surrender of policy for cash. 1040x amended form   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. 1040x amended form In general, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. 1040x amended form You should receive a Form 1099-R showing the total proceeds and the taxable part. 1040x amended form Report these amounts on Form 1040, lines 16a and 16b; Form 1040A, lines 12a and 12b; or Form 1040NR, lines 17a and 17b. 1040x amended form Endowment Contract Proceeds An endowment contract is a policy that pays over to you a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. 1040x amended form Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. 1040x amended form To determine your cost, subtract from the total premiums (or other consideration) paid for the contract any amount that you previously received under the contract and excluded from your income. 1040x amended form Include in your income the part of the lump-sum payment that is more than your cost. 1040x amended form Endowment proceeds that you choose to receive in installments instead of a lump-sum payment at the maturity of the policy are taxed as an annuity. 1040x amended form The tax treatment of an annuity is explained in Publication 575. 1040x amended form For this treatment to apply, you must choose to receive the proceeds in installments before receiving any part of the lump sum. 1040x amended form This election must be made within 60 days after the lump-sum payment first becomes payable to you. 1040x amended form Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are generally excluded from income if the insured is terminally or chronically ill. 1040x amended form However, see Exception , later. 1040x amended form For a chronically ill individual, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. 1040x amended form Accelerated death benefits paid on a per diem or other periodic basis without regard to the costs are excludable up to a limit. 1040x amended form In addition, if any portion of a death benefit under a life insurance contract on the life of a terminally or chronically ill individual is sold or assigned to a viatical settlement provider, the amount received also is excluded from income. 1040x amended form Generally, a viatical settlement provider is one who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill. 1040x amended form To report taxable accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. 1040x amended form Terminally or chronically ill defined. 1040x amended form   A terminally ill person is one who has been certified by a physician as having an illness or physical condition that reasonably can be expected to result in death within 24 months from the date of the certification. 1040x amended form A chronically ill person is one who is not terminally ill but has been certified (within the previous 12 months) by a licensed health care practitioner as meeting either of the following conditions. 1040x amended form The person is unable to perform (without substantial help) at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) for a period of 90 days or more because of a loss of functional capacity. 1040x amended form The person requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment. 1040x amended form Exception. 1040x amended form   The exclusion does not apply to any amount paid to a person other than the insured if that other person has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the other person, or Has a financial interest in the business of the other person. 1040x amended form Sale of Home You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return in most cases) on the sale of your main home. 1040x amended form Generally, if you can exclude all of the gain, you do not need to report the sale on your tax return. 1040x amended form You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. 1040x amended form Main home. 1040x amended form   Usually, your main home is the home you live in most of the time and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. 1040x amended form Repaying the first-time homebuyer credit because you sold your home. 1040x amended form   If you claimed a first-time homebuyer credit for your main home and you sell it, you may have to repay the credit. 1040x amended form For a home purchased in 2008 and used as your main home until sold in 2013, you must file Form 5405 and repay the balance of the unpaid credit on your 2013 tax return. 1040x amended form   For a home purchased after 2008, you generally must repay the entire credit if the home was sold (or otherwise ceased to be your main home) within 36 months of the purchase date. 1040x amended form If you purchased your home in 2009 and used it as your main home until sold in 2013, you do not have to repay the credit or file Form 5405. 1040x amended form If you purchased your home in 2010 and used it as your main home until sold in 2013, you may have to file Form 5405 and repay the entire credit on your 2013 tax return. 1040x amended form   See the Instructions for Form 5405 for more information about repaying the credit and exceptions to repayment that may apply to you. 1040x amended form Maximum Amount of Exclusion You can generally exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. 1040x amended form You meet the ownership test. 1040x amended form You meet the use test. 1040x amended form During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. 1040x amended form You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . 1040x amended form Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. 1040x amended form This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). 1040x amended form Exception to ownership and use tests. 1040x amended form   If you owned and lived in the property as your main home for less than 2 years, you still can claim an exclusion in some cases. 1040x amended form Generally, you must have sold the home due to a change in place of employment, health, or unforeseen circumstances. 1040x amended form The maximum amount you can exclude will be reduced. 1040x amended form See Publication 523, Selling Your Home, for more information. 1040x amended form Exception to use test for individuals with a disability. 1040x amended form   There is an exception to the use test if, during the 5-year period before the sale of your home: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year. 1040x amended form Under this exception, you are considered to live in your home during any time that you own the home and live in a facility (including a nursing home) that is licensed by a state or political subdivision to care for persons in your condition. 1040x amended form   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. 1040x amended form Exception to ownership test for property acquired in a like-kind exchange. 1040x amended form   You must have owned your main home for at least 5 years to qualify for the exclusion if you acquired your main home in a like-kind exchange. 1040x amended form This special 5-year ownership rule continues to apply to a home you acquired in a like-kind exchange and gave to another person. 1040x amended form A like-kind exchange is an exchange of property held for productive use in a trade or business or for investment. 1040x amended form See Publication 523 for more information. 1040x amended form Period of nonqualified use. 1040x amended form   Generally, the gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gain is allocated to periods of nonqualified use. 1040x amended form Nonqualified use is any period after December 31, 2008, during which the property is not used as the main home. 1040x amended form See Publication 523 for more information. 1040x amended form Married Persons In the special situations discussed below, if you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use test, you can exclude up to $250,000 of gain. 1040x amended form However, see Special rules for joint returns , next. 1040x amended form Special rules for joint returns. 1040x amended form   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. 1040x amended form You are married and file a joint return for the year. 1040x amended form Either you or your spouse meets the ownership test. 1040x amended form Both you and your spouse meet the use test. 1040x amended form During the 2-year period ending on the date of the sale, neither you nor your spouse exclude gain from the sale of another home. 1040x amended form Sale of home by surviving spouse. 1040x amended form   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. 1040x amended form   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home in 2013. 1040x amended form The sale or exchange took place no more than 2 years after the date of death of your spouse. 1040x amended form You have not remarried. 1040x amended form You and your spouse met the use test at the time of your spouse's death. 1040x amended form You or your spouse met the ownership test at the time of your spouse's death. 1040x amended form Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. 1040x amended form Home transferred from spouse. 1040x amended form   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. 1040x amended form Use of home after divorce. 1040x amended form   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. 1040x amended form Business Use or Rental of Home You may be able to exclude gain from the sale of a home that you have used for business or to produce rental income. 1040x amended form However, you must meet the ownership and use tests. 1040x amended form See Publication 523 for more information. 1040x amended form Depreciation after May 6, 1997. 1040x amended form   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. 1040x amended form See Publication 523 for more information. 1040x amended form Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and you do not qualify to exclude all of it, You have a gain and you choose not to exclude it, or You received Form 1099-S. 1040x amended form If you have a gain that you cannot or choose not to exclude, if you received a Form 1099-S, or if you have a deductible loss, report the sale on your tax return. 1040x amended form Report the sale on Part I or Part II of Form 8949 as a short-term or long-term transaction, depending on how long you owned the home. 1040x amended form If you used your home for business or to produce rental income, you may have to use Form 4797, Sales of Business Property, to report the sale of the business or rental part. 1040x amended form See Publication 523 for more information. 1040x amended form Reverse Mortgages A revers
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The 1040x Amended Form

1040x amended form 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. 1040x amended form A pension is generally a series of payments made to you after you retire from work. 1040x amended form Pension payments are made regularly and are for past services with an employer. 1040x amended form An annuity is a series of payments under a contract. 1040x amended form You can buy the contract alone or you can buy it with the help of your employer. 1040x amended form Annuity payments are made regularly for more than one full year. 1040x amended form Note. 1040x amended form Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted. 1040x amended form Types of pensions and annuities. 1040x amended form   Particular types of pensions and annuities include: Fixed period annuities. 1040x amended form You receive definite amounts at regular intervals for a definite length of time. 1040x amended form Annuities for a single life. 1040x amended form You receive definite amounts at regular intervals for life. 1040x amended form The payments end at death. 1040x amended form Joint and survivor annuities. 1040x amended form The first annuitant receives a definite amount at regular intervals for life. 1040x amended form After he or she dies, a second annuitant receives a definite amount at regular intervals for life. 1040x amended form The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. 1040x amended form Variable annuities. 1040x amended form You receive payments that may vary in amount for a definite length of time or for life. 1040x amended form The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds or cost-of-living indexes. 1040x amended form Disability pensions. 1040x amended form You are under minimum retirement age and receive payments because you retired on disability. 1040x amended form 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. 1040x amended form If your annuity starting date is after November 18, 1996, the General Rule cannot be used for the following qualified plans. 1040x amended form 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. 1040x amended form This plan must meet Internal Revenue Code requirements. 1040x amended form It qualifies for special tax benefits, including tax deferral for employer contributions and rollover distributions. 1040x amended form However, you must use the General Rule if you were 75 or over and the annuity payments are guaranteed for more than 5 years. 1040x amended form A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. 1040x amended form A tax-sheltered annuity is a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization. 1040x amended form   The General Rule is used to figure the tax treatment of various types of pensions and annuities, including nonqualified employee plans. 1040x amended form A nonqualified employee plan is an employer's plan that does not meet Internal Revenue Code requirements. 1040x amended form It does not qualify for most of the tax benefits of a qualified plan. 1040x amended form Annuity worksheets. 1040x amended form   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. 1040x amended form Request for a ruling. 1040x amended form   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. 1040x amended form This is treated as a request for a ruling. 1040x amended form See Requesting a Ruling on Taxation of Annuity near the end of this publication. 1040x amended form Withholding tax and estimated tax. 1040x amended form   Your pension or annuity is subject to federal income tax withholding unless you choose not to have tax withheld. 1040x amended form 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. 1040x amended form 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. 1040x amended form 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). 1040x amended form These payments are also known as amounts received as an annuity. 1040x amended form 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. 1040x amended form In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments. 1040x amended form The amount of each payment that is more than the part that represents your net cost is taxable. 1040x amended form 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. 1040x amended form These terms are explained in the following discussions. 1040x amended form 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. 1040x amended form First, find your net cost of the contract as of the annuity starting date (defined later). 1040x amended form To find this amount, you must first figure the total premiums, contributions, or other amounts paid. 1040x amended form This includes the amounts your employer contributed if you were required to include these amounts in income. 1040x amended form It also includes amounts you actually contributed (except amounts for health and accident benefits and deductible voluntary employee contributions). 1040x amended form 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. 1040x amended form Any additional premiums paid for double indemnity or disability benefits. 1040x amended form Any other tax-free amounts you received under the contract or plan before the later of the dates in (1). 1040x amended form 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. 1040x amended form Example. 1040x amended form 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. 1040x amended form The annuity starting date is July 1. 1040x amended form This is the date you use in figuring your investment in the contract and your expected return (discussed later). 1040x amended form Adjustments If any of the following items apply, adjust (add or subtract) your total cost to find your net cost. 1040x amended form Foreign employment. 1040x amended form   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. 1040x amended form 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. 1040x amended form Foreign employment contributions while a nonresident alien. 1040x amended form   In determining your cost, special rules apply if you are a U. 1040x amended form S. 1040x amended form citizen or resident alien who received distributions from a plan to which contributions were made while you were a nonresident alien. 1040x amended form 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. 1040x amended form Death benefit exclusion. 1040x amended form   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. 1040x amended form The beneficiary of a deceased employee who died after August 20, 1996, will not qualify for the death benefit exclusion. 1040x amended form How to adjust your total cost. 1040x amended form   If you are eligible, treat the amount of any allowable death benefit exclusion as additional cost paid by the employee. 1040x amended form Add it to the cost or unrecovered cost of the annuity at the annuity starting date. 1040x amended form See Example 3 under Computation Under General Rule for an illustration of the adjustment to the cost of the contract. 1040x amended form Net cost. 1040x amended form   Your total cost plus certain adjustments and minus other amounts already recovered before the annuity starting date is your net cost. 1040x amended form This is the unrecovered investment in the contract as of the annuity starting date. 1040x amended form If your annuity starting date is after 1986, this is the maximum amount that you may recover tax free under the contract. 1040x amended form Refund feature. 1040x amended form   Adjustment for the value of the refund feature is only applicable when you report your pension or annuity under the General Rule. 1040x amended form 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. 1040x amended form   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. 1040x amended form Zero value of refund feature. 1040x amended form   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. 1040x amended form   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). 1040x amended form   If you do not meet these requirements, you will have to figure the value of the refund feature, as explained in the following discussion. 1040x amended form Examples. 1040x amended form The first example shows how to figure the value of the refund feature when there is only one beneficiary. 1040x amended form 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. 1040x amended form In both examples, the taxpayer elects to use Tables V through VIII. 1040x amended form 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. 1040x amended form Example 1. 1040x amended form At age 65, Barbara bought for $21,053 an annuity with a refund feature. 1040x amended form She will get $100 a month for life. 1040x amended form 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. 1040x amended form In this case, the contract cost and the total guaranteed return are the same ($21,053). 1040x amended form 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. 1040x amended form 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. 1040x amended form 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). 1040x amended form 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. 1040x amended form Example 2. 1040x amended form John died while still employed. 1040x amended form His widow, Eleanor, age 48, receives $171 a month for the rest of her life. 1040x amended form John's son, Elmer, age 9, receives $50 a month until he reaches age 18. 1040x amended form John's contributions to the retirement fund totaled $7,559. 1040x amended form 45, with interest on those contributions of $1,602. 1040x amended form 53. 1040x amended form The guarantee or total refund feature of the contract is $9,161. 1040x amended form 98 ($7,559. 1040x amended form 45 plus $1,602. 1040x amended form 53). 1040x amended form 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. 1040x amended form 9 $71,614. 1040x amended form 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. 1040x amended form 0 5,400. 1040x amended form 00   3) Total expected return   $77,014. 1040x amended form 80 B) Adjustment for refund feature:       1) Contributions (net cost) $7,559. 1040x amended form 45   2) Guaranteed amount (contributions of $7,559. 1040x amended form 45 plus interest of $1,602. 1040x amended form 53) $9,161. 1040x amended form 98   3) Minus: Expected return under child's (temporary life) annuity (A(2)) 5,400. 1040x amended form 00   4) Net guaranteed amount $3,761. 1040x amended form 98   5) Multiple from Table VII (nearest age 48 for 2 years duration (recovery of $3,761. 1040x amended form 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. 1040x amended form 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. 1040x amended form See the discussion of expected return, later in this publication. 1040x amended form Free IRS help. 1040x amended form   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. 1040x amended form Expected Return Your expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 1040x amended form The following discussions explain how to figure the expected return with each type of annuity. 1040x amended form A person's age, for purposes of figuring the expected return, is the age at the birthday nearest to the annuity starting date. 1040x amended form Fixed period annuity. 1040x amended form   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. 1040x amended form It is the total amount you will get beginning at the annuity starting date. 1040x amended form You will receive specific periodic payments for a definite period of time, such as a fixed number of months (but not less than 13). 1040x amended form 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. 1040x amended form Single life annuity. 1040x amended form   If you are to get annuity payments for the rest of your life, find your expected return as follows. 1040x amended form You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. 1040x amended form These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later). 1040x amended form   You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. 1040x amended form See Adjustments to Tables I, II, V, VI, and VIA following Table I. 1040x amended form Example. 1040x amended form Henry bought an annuity contract that will give him an annuity of $500 a month for his life. 1040x amended form 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. 1040x amended form 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. 1040x amended form 2 multiple by +. 1040x amended form 1. 1040x amended form His expected return would then be $115,800 ($6,000 × 19. 1040x amended form 3). 1040x amended form Annuity for shorter of life or specified period. 1040x amended form   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. 1040x amended form To figure your expected return, multiply the amount of your annual payment by a multiple in Table IV or VIII for temporary life annuities. 1040x amended form 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. 1040x amended form Example. 1040x amended form Harriet purchased an annuity this year that will pay her $200 each month for five years or until she dies, whichever period is shorter. 1040x amended form She was age 65 at her birthday nearest the annuity starting date. 1040x amended form 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. 1040x amended form 9 Expected return $11,760 She uses Table VIII (not Table IV) because all her contributions were made after June 30, 1986. 1040x amended form See Special Elections, later. 1040x amended form Joint and survivor annuities. 1040x amended form   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. 1040x amended form To figure the expected return, multiply the annual payment by a multiple in Table II or VI based on your joint life expectancies. 1040x amended form If your payments are made quarterly, semiannually, or annually, you may need to adjust these multiples. 1040x amended form See Adjustments to Tables I, II, V, VI, and VIA following Table I near the end of this publication. 1040x amended form Example. 1040x amended form 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. 1040x amended form At John's annuity starting date, his age at his nearest birthday is 70 and his wife's at her nearest birthday is 67. 1040x amended form The expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table VI, ages 67 and 70 × 22. 1040x amended form 0 Expected return $132,000 Different payments to survivor. 1040x amended form   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. 1040x amended form Example 1. 1040x amended form 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. 1040x amended form 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. 1040x amended form 0 Multiple for Gerald, age 70 (from Table V)   16. 1040x amended form 0 Difference: Multiple applicable to Mary   6. 1040x amended form 0 Gerald's annual payment ($500 × 12) $6,000   Gerald's multiple 16. 1040x amended form 0   Gerald's expected return   $96,000 Mary's annual payment ($350 × 12) $4,200   Mary's multiple 6. 1040x amended form 0   Mary's expected return   25,200 Total expected return under the contract   $121,200 Example 2. 1040x amended form Your husband died while still employed. 1040x amended form 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. 1040x amended form Your daughters, Marie and Jean, are each entitled to immediate temporary life annuities of $150 a month until they reach age 18. 1040x amended form You were 50 years old at the annuity starting date. 1040x amended form Marie was 16 and Jean was 14. 1040x amended form 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. 1040x amended form 1 × $4,800 annual payment) $158,880 Marie, age 16 for 2 years duration (multiple from Table VIII—2. 1040x amended form 0 × $1,800 annual payment) 3,600 Jean, age 14 for 4 years duration (multiple from Table VIII—4. 1040x amended form 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. 1040x amended form Computation Under the General Rule Note. 1040x amended form Variable annuities use a different computation for determining the exclusion amounts. 1040x amended form See Variable annuities later. 1040x amended form Under the General Rule, you figure the taxable part of your annuity by using the following steps: Step 1. 1040x amended form   Figure the amount of your investment in the contract, including any adjustments for the refund feature and the death benefit exclusion, if applicable. 1040x amended form See Death benefit exclusion , earlier. 1040x amended form Step 2. 1040x amended form   Figure your expected return. 1040x amended form Step 3. 1040x amended form   Divide Step 1 by Step 2 and round to three decimal places. 1040x amended form This will give you the exclusion percentage. 1040x amended form Step 4. 1040x amended form   Multiply the exclusion percentage by the first regular periodic payment. 1040x amended form The result is the tax-free part of each pension or annuity payment. 1040x amended form   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. 1040x amended form 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. 1040x amended form   Each annuitant applies the same exclusion percentage to his or her initial payment called for in the contract. 1040x amended form Step 5. 1040x amended form   Multiply the tax-free part of each payment (step 4) by the number of payments received during the year. 1040x amended form This will give you the tax-free part of the total payment for the year. 1040x amended form    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. 1040x amended form This fractional amount is multiplied by your exclusion percentage to get the tax-free part. 1040x amended form Step 6. 1040x amended form   Subtract the tax-free part from the total payment you received. 1040x amended form The rest is the taxable part of your pension or annuity. 1040x amended form Example 1. 1040x amended form You purchased an annuity with an investment in the contract of $10,800. 1040x amended form Under its terms, the annuity will pay you $100 a month for life. 1040x amended form The multiple for your age (age 65) is 20. 1040x amended form 0 as shown in Table V. 1040x amended form Your expected return is $24,000 (20 × 12 × $100). 1040x amended form Your cost of $10,800, divided by your expected return of $24,000, equals 45. 1040x amended form 0%. 1040x amended form This is the percentage you will not have to include in income. 1040x amended form 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. 1040x amended form If you had received only six payments of $100 ($600) during the year, your exclusion would have been $270 (45% of $100 × 6 payments). 1040x amended form Example 2. 1040x amended form Gerald bought a joint and survivor annuity. 1040x amended form Gerald's investment in the contract is $62,712 and the expected return is $121,200. 1040x amended form The exclusion percentage is 51. 1040x amended form 7% ($62,712 ÷ $121,200). 1040x amended form Gerald will receive $500 a month ($6,000 a year). 1040x amended form Each year, until his net cost is recovered, $3,102 (51. 1040x amended form 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. 1040x amended form If Gerald dies, his wife will receive $350 a month ($4,200 a year). 1040x amended form If Gerald had not recovered all of his net cost before his death, his wife will use the same exclusion percentage (51. 1040x amended form 7%). 1040x amended form Each year, until the entire net cost is recovered, his wife will receive $2,171. 1040x amended form 40 (51. 1040x amended form 7% of her payments received of $4,200) tax free. 1040x amended form She will include $2,028. 1040x amended form 60 ($4,200 − $2,171. 1040x amended form 40) in her income tax return. 1040x amended form Example 3. 1040x amended form 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. 1040x amended form Your two daughters each receive annual annuities of $1,800 until they reach age 18. 1040x amended form Your husband contributed $25,576 to the plan. 1040x amended form You are eligible for the $5,000 death benefit exclusion because your husband died before August 21, 1996. 1040x amended form 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. 1040x amended form The exclusion percentage of 18. 1040x amended form 0% ($30,576 ÷ $169,680) applies to the annuity payments you and each of your daughters receive. 1040x amended form Each full year $864 (18. 1040x amended form 0% × $4,800) will be tax free to you, and you must include $3,936 in your income tax return. 1040x amended form Each year, until age 18, $324 (18. 1040x amended form 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. 1040x amended form Part-year payments. 1040x amended form   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. 1040x amended form   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. 1040x amended form 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. 1040x amended form   If you received a fractional payment, follow Step 5, discussed earlier. 1040x amended form This gives you the tax-free part of your total payment. 1040x amended form Example. 1040x amended form On September 28, Mary bought an annuity contract for $22,050 that will give her $125 a month for life, beginning October 30. 1040x amended form The applicable multiple from Table V is 23. 1040x amended form 3 (age 61). 1040x amended form Her expected return is $34,950 ($125 × 12 × 23. 1040x amended form 3). 1040x amended form Mary's investment in the contract of $22,050, divided by her expected return of $34,950, equals 63. 1040x amended form 1%. 1040x amended form Each payment received will consist of 63. 1040x amended form 1% return of cost and 36. 1040x amended form 9% taxable income, until her net cost of the contract is fully recovered. 1040x amended form During the first year, Mary received three payments of $125, or $375, of which $236. 1040x amended form 63 (63. 1040x amended form 1% × $375) is a return of cost. 1040x amended form The remaining $138. 1040x amended form 37 is included in income. 1040x amended form Increase in annuity payments. 1040x amended form   The tax-free amount remains the same as the amount figured at the annuity starting date, even if the payment increases. 1040x amended form All increases in the installment payments are fully taxable. 1040x amended form   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. 1040x amended form 72-5(a)(5) of the regulations. 1040x amended form Example. 1040x amended form Joe's wife died while she was still employed and, as her beneficiary, he began receiving an annuity of $147 per month. 1040x amended form In figuring the taxable part, Joe elects to use Tables V through VIII. 1040x amended form The cost of the contract was $7,938, consisting of the sum of his wife's net contributions, adjusted for any refund feature. 1040x amended form His expected return as of the annuity starting date is $35,280 (age 65, multiple of 20. 1040x amended form 0 × $1,764 annual payment). 1040x amended form The exclusion percentage is $7,938 ÷ $35,280, or 22. 1040x amended form 5%. 1040x amended form During the year he received 11 monthly payments of $147, or $1,617. 1040x amended form Of this amount, 22. 1040x amended form 5% × $147 × 11 ($363. 1040x amended form 83) is tax free as a return of cost and the balance of $1,253. 1040x amended form 17 is taxable. 1040x amended form Later, because of a cost-of-living increase, his annuity payment was increased to $166 per month, or $1,992 a year (12 × $166). 1040x amended form The tax-free part is still only 22. 1040x amended form 5% of the annuity payments as of the annuity starting date (22. 1040x amended form 5% × $147 × 12 = $396. 1040x amended form 90 for a full year). 1040x amended form The increase of $228 ($1,992 − $1,764 (12 × $147)) is fully taxable. 1040x amended form Variable annuities. 1040x amended form   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. 1040x amended form   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. 1040x amended form If the annuity is for life, you determine the total number of payments by using a multiple from the appropriate actuarial table. 1040x amended form Example. 1040x amended form Frank purchased a variable annuity at age 65. 1040x amended form The total cost of the contract was $12,000. 1040x amended form The annuity starting date is January 1 of the year of purchase. 1040x amended form His annuity will be paid, starting July 1, in variable annual installments for his life. 1040x amended form 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. 1040x amended form   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. 1040x amended form 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. 1040x amended form The result is added to the previously figured periodic tax-free part. 1040x amended form The sum is the amount of each future payment that will be tax free. 1040x amended form Example. 1040x amended form 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. 1040x amended form Frank does not pay tax on the $500 (second year) payment because $600 of each annual pension payment is tax free. 1040x amended form 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. 1040x amended form 00 Amount received in second year 500. 1040x amended form 00 Difference $100. 1040x amended form 00 Number of remaining payments after the first 2 payments (age 67, from Table V) 18. 1040x amended form 4 Amount to be added to previously determined annual tax-free part ($100 ÷ 18. 1040x amended form 4) $5. 1040x amended form 43 Revised annual tax-free part for third and later years ($600 + $5. 1040x amended form 43) $605. 1040x amended form 43 Amount taxable in third year ($1,200 − $605. 1040x amended form 43) $594. 1040x amended form 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. 1040x amended form 72–4(d)(3) of the Income Tax Regulations. 1040x amended form The statement must also show the following information: The annuity starting date and your age on that date. 1040x amended form The first day of the first period for which you received an annuity payment in the current year. 1040x amended form Your investment in the contract as originally figured. 1040x amended form 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. 1040x amended form Exclusion Limits Your annuity starting date determines the total amount of annuity income that you can exclude from income over the years. 1040x amended form Exclusion limited to net cost. 1040x amended form   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). 1040x amended form This is the unrecovered investment in the contract as of the annuity starting date. 1040x amended form   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. 1040x amended form This deduction is not subject to the 2%-of-adjusted-gross-income limit. 1040x amended form Example 1. 1040x amended form Your annuity starting date is after 1986. 1040x amended form Your total cost is $12,500, and your net cost is $10,000, taking into account certain adjustments. 1040x amended form There is no refund feature. 1040x amended form Your monthly annuity payment is $833. 1040x amended form 33. 1040x amended form Your exclusion ratio is 12% and you exclude $100 a month. 1040x amended form Your exclusion ends after 100 months, when you have excluded your net cost of $10,000. 1040x amended form Thereafter, your annuity payments are fully taxable. 1040x amended form Example 2. 1040x amended form 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. 1040x amended form The adjustment for the refund feature is $1,000, so the investment in the contract is $9,000. 1040x amended form The exclusion ratio is 10. 1040x amended form 8%, and your monthly exclusion is $90. 1040x amended form After 5 years (60 months), you have recovered tax free only $5,400 ($90 x 60). 1040x amended form 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. 1040x amended form Your unrecovered investment is determined without regard to the refund feature adjustment, discussed earlier, under Adjustments. 1040x amended form Exclusion not limited to net cost. 1040x amended form   If your annuity starting date was before 1987, you could continue to take your monthly exclusion for as long as you receive your annuity. 1040x amended form If you choose a joint and survivor annuity, your survivor continues to take the survivor's exclusion figured as of the annuity starting date. 1040x amended form The total exclusion may be more than your investment in the contract. 1040x amended form 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. 1040x amended form 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. 1040x amended form These tables correspond to the old Tables I through IV. 1040x amended form In general, Tables V through VIII must be used if you made contributions to the retirement plan after June 30, 1986. 1040x amended form If you made no contributions to the plan after June 30, 1986, generally you must use only Tables I through IV. 1040x amended form 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). 1040x amended form 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. 1040x amended form Contributions made both before July 1986 and after June 1986. 1040x amended form   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. 1040x amended form (See the examples below. 1040x amended form )    Making the election. 1040x amended form 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. 1040x amended form 72–6 of the Income Tax Regulations. 1040x amended form ”   The statement must also include your name, address, social security number, and the amount of the pre-July 1986 investment in the contract. 1040x amended form   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. 1040x amended form 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. 1040x amended form    Advantages of election. 1040x amended form 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. 1040x amended form    If you intend to make this election, save your records that substantiate your pre-July 1986 and post-June 1986 contributions. 1040x amended form 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. 1040x amended form   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. 1040x amended form Example 1. 1040x amended form Bill, who is single, contributed $42,000 to the retirement plan and will receive an annual annuity of $24,000 for life. 1040x amended form Payment of the $42,000 contribution is guaranteed under a refund feature. 1040x amended form Bill is 55 years old as of the annuity starting date. 1040x amended form 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. 1040x amended form       Pre- July 1986   Post- June 1986 A. 1040x amended form 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. 1040x amended form 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. 1040x amended form 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. 1040x amended form Expected return         1) Annual annuity receivable $24,000   $24,000   2) Multiples from Tables I and V 21. 1040x amended form 7   28. 1040x amended form 6   3) Expected return, C(1) × C(2) $520,800   $686,400 D. 1040x amended form Tax-free part of annuity         1) Exclusion ratio as decimal,  B(3) ÷ C(3) . 1040x amended form 079   . 1040x amended form 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). 1040x amended form The taxable part of his annuity is $22,080 ($24,000 minus $1,920). 1040x amended form 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). 1040x amended form Example 2. 1040x amended form Al is age 62 at his nearest birthday to the annuity starting date. 1040x amended form Al's wife is age 60 at her nearest birthday to the annuity starting date. 1040x amended form 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. 1040x amended form The pre-July 1986 investment in the contract is $53,100 and the post-June 1986 investment in the contract is $7,000. 1040x amended form Al makes the election described in Example 1 . 1040x amended form For purposes of this example, assume the refund feature adjustment is zero. 1040x amended form If an adjustment is required, IRS will figure the amount. 1040x amended form See Requesting a Ruling on Taxation of Annuity near the end of this publication. 1040x amended form       Pre-  July 1986   Post-  June 1986 A. 1040x amended form 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. 1040x amended form 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. 1040x amended form Expected return         1) Multiple for both annuitants from Tables II and VI 25. 1040x amended form 4   28. 1040x amended form 8   2) Multiple for first annuitant from Tables I and V 16. 1040x amended form 9   22. 1040x amended form 5   3) Multiple applicable to surviving annuitant, subtract C(2) from C(1) 8. 1040x amended form 5   6. 1040x amended form 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. 1040x amended form Tax-free part of annuity         1) Exclusion ratio as a decimal, B(3) ÷ C(8) . 1040x amended form 209   . 1040x amended form 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). 1040x amended form The taxable part of his annuity is $9,216 ($12,000 − $2,784). 1040x amended form 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. 1040x amended form After Al's death, his widow will apply the same exclusion percentages (20. 1040x amended form 9% and 2. 1040x amended form 3%) to her annual annuity of $6,000 to figure the tax-free part of her annuity. 1040x amended form Annuity received after June 30, 1986. 1040x amended form   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. 1040x amended form Once made, you cannot revoke the election, which will apply to all payments during the year and in any later year. 1040x amended form    Make the election by attaching the following statement to your income tax return. 1040x amended form    “I elect, under section 1. 1040x amended form 72–9 of the Income Tax Regulations, to treat my entire cost of the contract as a post-June 1986 cost of the plan. 1040x amended form ”   The statement must also include your name, address, and social security number. 1040x amended form   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. 1040x amended form Disqualifying form of payment or settlement. 1040x amended form   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. 1040x amended form See regulations section 1. 1040x amended form 72–6(d)(3) for additional examples of disqualifying forms of payment or settlement. 1040x amended form You can find the Income Tax Regulations in many libraries and at Internal Revenue Service Offices. 1040x amended form Worksheets for Determining Taxable Annuity Worksheets I and II. 1040x amended form   Worksheets I and II follow for determining your taxable annuity under Regulations Section 1. 1040x amended form 72–6(d)(6) Election. 1040x amended form Worksheet I For Determining Taxable Annuity Under Regulations Section 1. 1040x amended form 72-6(d)(6) Election For Single Annuitant With No Survivor Annuity               Pre-July 1986   Post-June 1986 A. 1040x amended form   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 1040x amended form )             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. 1040x amended form If not, the IRS will calculate the refund feature percentage. 1040x amended form             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 1040x amended form   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. 1040x amended form   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. 1040x amended form   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. 1040x amended form     Worksheet II For Determining Taxable Annuity Under Regulations Section 1. 1040x amended form 72-6(d)(6) Election For Joint and Survivor Annuity               Pre-July 1986   Post-June 1986 A. 1040x amended form   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 1040x amended form )             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. 1040x amended form If not, the IRS will calculate the refund feature percentage. 1040x amended form             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 1040x amended form   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. 1040x amended form   Expected Return             1)   Multiples for both annuitants, Tables II and VI             2)   Multiple for retiree. 1040x amended form 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. 1040x amended form   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. 1040x amended form   Actuarial Tables Please click here for the text description of the image. 1040x amended form Actuarial Tables Please click here for the text description of the image. 1040x amended form Actuarial Tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables 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Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form Actuarial tables Please click here for the text description of the image. 1040x amended form 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. 1040x amended form If you make this request, you are asking for a ruling. 1040x amended form User fee. 1040x amended form   Under the law in effect at the time this publication went to print, the IRS must charge a user fee for all ruling requests. 1040x amended form You should call the IRS for the proper fee. 1040x amended form A request solely for the value of the refund feature is not treated as a ruling request and requires no fee. 1040x amended form Send your request to:     Internal Revenue Service  Attention: EP Letter Rulings P. 1040x amended form O. 1040x amended form 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. 1040x amended form When to make the request. 1040x amended form   Please note that requests sent between February 1 and April 15 may experience some delay. 1040x amended form We process requests in the order received, and we will reply to your request as soon as we can process it. 1040x amended form 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. 1040x amended form S. 1040x amended form Individual Income Tax Return, to get an extension of time to file. 1040x amended form Information you must furnish. 1040x amended form   You must furnish the information listed below so the IRS can comply with your request. 1040x amended form Failure to furnish the information will result in a delay in processing your request. 1040x amended form 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. 1040x amended form Copies of any documents showing distributions, annuity rates, and annuity options available to you. 1040x amended form A copy of any Form 1099–R you received since your annuity began. 1040x amended form A statement indicating whether you have filed your return for the year for which you are making the request. 1040x amended form If you have requested an extension of time to file that return, please indicate the extension date. 1040x amended form Your daytime phone number. 1040x amended form Your current mailing address. 1040x amended form A power of attorney if someone other than you, an attorney, a certified public accountant, or an enrolled agent is signing this request. 1040x amended form Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose. 1040x amended form A completed Tax Information Sheet (or facsimile) shown on the next page. 1040x amended form Sign and date the Disclosure and Perjury Statement (or facsimile) at the end of the tax information sheet. 1040x amended form This statement must be signed by the retiree or the survivor annuitant. 1040x amended form It cannot be signed by a representative. 1040x amended form Tax Information Sheet Please click here for the text description of the image. 1040x amended form Tax Information Sheet Please click here for the text description of the image. 1040x amended form 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. 1040x amended form Free help with your tax return. 1040x amended form   You can get free help preparing your return nationwide from IRS-certified volunteers. 1040x amended form The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 1040x amended form The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040x amended form 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. 1040x amended form In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 1040x amended form To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 1040x amended form gov, download the IRS2Go app, or call 1-800-906-9887. 1040x amended form   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040x amended form To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040x amended form aarp. 1040x amended form org/money/taxaide or call 1-888-227-7669. 1040x amended form For more information on these programs, go to IRS. 1040x amended form gov and enter “VITA” in the search box. 1040x amended form Internet. 1040x amended form    IRS. 1040x amended form gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 1040x amended form Download the free IRS2Go app from the iTunes app store or from Google Play. 1040x amended form 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. 1040x amended form Check the status of your 2013 refund with the Where's My Refund? application on IRS. 1040x amended form gov or download the IRS2Go app and select the Refund Status option. 1040x amended form The IRS issues more than 9 out of 10 refunds in less than 21 days. 1040x amended form 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. 1040x amended form You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040x amended form The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 1040x amended form Use the Interactive Tax Assistant (ITA) to research your tax questions. 1040x amended form No need to wait on the phone or stand in line. 1040x amended form 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. 1040x amended form When you reach the response screen, you can print the entire interview and the final response for your records. 1040x amended form New subject areas are added on a regular basis. 1040x amended form  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 1040x amended form gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 1040x amended form You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 1040x amended form The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 1040x amended form 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. 1040x amended form 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. 1040x amended form You can also ask the IRS to mail a return or an account transcript to you. 1040x amended form Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 1040x amended form gov or by calling 1-800-908-9946. 1040x amended form Tax return and tax account transcripts are generally available for the current year and the past three years. 1040x amended form Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 1040x amended form Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 1040x amended form 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. 1040x amended form Check the status of your amended return using Where's My Amended Return? Go to IRS. 1040x amended form gov and enter Where's My Amended Return? in the search box. 1040x amended form You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 1040x amended form It can take up to 3 weeks from the date you mailed it to show up in our system. 1040x amended form Make a payment using one of several safe and convenient electronic payment options available on IRS. 1040x amended form gov. 1040x amended form Select the Payment tab on the front page of IRS. 1040x amended form gov for more information. 1040x amended form Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 1040x amended form Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040x amended form gov. 1040x amended form 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. 1040x amended form Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040x amended form gov. 1040x amended form Request an Electronic Filing PIN by going to IRS. 1040x amended form gov and entering Electronic Filing PIN in the search box. 1040x amended form Download forms, instructions and publications, including accessible versions for people with disabilities. 1040x amended form Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 1040x amended form gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 1040x amended form An employee can answer questions about your tax account or help you set up a payment plan. 1040x amended form Before you visit, check the Office Locator on IRS. 1040x amended form gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 1040x amended form If you have a special need, such as a disability, you can request an appointment. 1040x amended form Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 1040x amended form Apply for an Employer Identification Number (EIN). 1040x amended form Go to IRS. 1040x amended form gov and enter Apply for an EIN in the search box. 1040x amended form Read the Internal Revenue Code, regulations, or other official guidance. 1040x amended form Read Internal Revenue Bulletins. 1040x amended form Sign up to receive local and national tax news and more by email. 1040x amended form Just click on “subscriptions” above the search box on IRS. 1040x amended form gov and choose from a variety of options. 1040x amended form    Phone. 1040x amended form You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 1040x amended form Download the free IRS2Go app from the iTunes app store or from Google Play. 1040x amended form Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 1040x amended form gov, or download the IRS2Go app. 1040x amended form 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. 1040x amended form The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040x amended form Mos