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Amend A Federal Tax Return

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Amend A Federal Tax Return

Amend a federal tax return 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. Amend a federal tax return A pension is generally a series of payments made to you after you retire from work. Amend a federal tax return Pension payments are made regularly and are for past services with an employer. Amend a federal tax return An annuity is a series of payments under a contract. Amend a federal tax return You can buy the contract alone or you can buy it with the help of your employer. Amend a federal tax return Annuity payments are made regularly for more than one full year. Amend a federal tax return Note. Amend a federal tax return Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted. Amend a federal tax return Types of pensions and annuities. Amend a federal tax return   Particular types of pensions and annuities include: Fixed period annuities. Amend a federal tax return You receive definite amounts at regular intervals for a definite length of time. Amend a federal tax return Annuities for a single life. Amend a federal tax return You receive definite amounts at regular intervals for life. Amend a federal tax return The payments end at death. Amend a federal tax return Joint and survivor annuities. Amend a federal tax return The first annuitant receives a definite amount at regular intervals for life. Amend a federal tax return After he or she dies, a second annuitant receives a definite amount at regular intervals for life. Amend a federal tax return The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. Amend a federal tax return Variable annuities. Amend a federal tax return You receive payments that may vary in amount for a definite length of time or for life. Amend a federal tax return The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds or cost-of-living indexes. Amend a federal tax return Disability pensions. Amend a federal tax return You are under minimum retirement age and receive payments because you retired on disability. Amend a federal tax return 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. Amend a federal tax return If your annuity starting date is after November 18, 1996, the General Rule cannot be used for the following qualified plans. Amend a federal tax return 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. Amend a federal tax return This plan must meet Internal Revenue Code requirements. Amend a federal tax return It qualifies for special tax benefits, including tax deferral for employer contributions and rollover distributions. Amend a federal tax return However, you must use the General Rule if you were 75 or over and the annuity payments are guaranteed for more than 5 years. Amend a federal tax return A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. Amend a federal tax return A tax-sheltered annuity is a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization. Amend a federal tax return   The General Rule is used to figure the tax treatment of various types of pensions and annuities, including nonqualified employee plans. Amend a federal tax return A nonqualified employee plan is an employer's plan that does not meet Internal Revenue Code requirements. Amend a federal tax return It does not qualify for most of the tax benefits of a qualified plan. Amend a federal tax return Annuity worksheets. Amend a federal tax return   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. Amend a federal tax return Request for a ruling. Amend a federal tax return   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. Amend a federal tax return This is treated as a request for a ruling. Amend a federal tax return See Requesting a Ruling on Taxation of Annuity near the end of this publication. Amend a federal tax return Withholding tax and estimated tax. Amend a federal tax return   Your pension or annuity is subject to federal income tax withholding unless you choose not to have tax withheld. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return 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). Amend a federal tax return These payments are also known as amounts received as an annuity. Amend a federal tax return 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. Amend a federal tax return In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments. Amend a federal tax return The amount of each payment that is more than the part that represents your net cost is taxable. Amend a federal tax return 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. Amend a federal tax return These terms are explained in the following discussions. Amend a federal tax return 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. Amend a federal tax return First, find your net cost of the contract as of the annuity starting date (defined later). Amend a federal tax return To find this amount, you must first figure the total premiums, contributions, or other amounts paid. Amend a federal tax return This includes the amounts your employer contributed if you were required to include these amounts in income. Amend a federal tax return It also includes amounts you actually contributed (except amounts for health and accident benefits and deductible voluntary employee contributions). Amend a federal tax return 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. Amend a federal tax return Any additional premiums paid for double indemnity or disability benefits. Amend a federal tax return Any other tax-free amounts you received under the contract or plan before the later of the dates in (1). Amend a federal tax return 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. Amend a federal tax return Example. Amend a federal tax return 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. Amend a federal tax return The annuity starting date is July 1. Amend a federal tax return This is the date you use in figuring your investment in the contract and your expected return (discussed later). Amend a federal tax return Adjustments If any of the following items apply, adjust (add or subtract) your total cost to find your net cost. Amend a federal tax return Foreign employment. Amend a federal tax return   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. Amend a federal tax return 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. Amend a federal tax return Foreign employment contributions while a nonresident alien. Amend a federal tax return   In determining your cost, special rules apply if you are a U. Amend a federal tax return S. Amend a federal tax return citizen or resident alien who received distributions from a plan to which contributions were made while you were a nonresident alien. Amend a federal tax return 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. Amend a federal tax return Death benefit exclusion. Amend a federal tax return   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. Amend a federal tax return The beneficiary of a deceased employee who died after August 20, 1996, will not qualify for the death benefit exclusion. Amend a federal tax return How to adjust your total cost. Amend a federal tax return   If you are eligible, treat the amount of any allowable death benefit exclusion as additional cost paid by the employee. Amend a federal tax return Add it to the cost or unrecovered cost of the annuity at the annuity starting date. Amend a federal tax return See Example 3 under Computation Under General Rule for an illustration of the adjustment to the cost of the contract. Amend a federal tax return Net cost. Amend a federal tax return   Your total cost plus certain adjustments and minus other amounts already recovered before the annuity starting date is your net cost. Amend a federal tax return This is the unrecovered investment in the contract as of the annuity starting date. Amend a federal tax return If your annuity starting date is after 1986, this is the maximum amount that you may recover tax free under the contract. Amend a federal tax return Refund feature. Amend a federal tax return   Adjustment for the value of the refund feature is only applicable when you report your pension or annuity under the General Rule. Amend a federal tax return 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. Amend a federal tax return   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. Amend a federal tax return Zero value of refund feature. Amend a federal tax return   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. Amend a federal tax return   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). Amend a federal tax return   If you do not meet these requirements, you will have to figure the value of the refund feature, as explained in the following discussion. Amend a federal tax return Examples. Amend a federal tax return The first example shows how to figure the value of the refund feature when there is only one beneficiary. Amend a federal tax return 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. Amend a federal tax return In both examples, the taxpayer elects to use Tables V through VIII. Amend a federal tax return 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. Amend a federal tax return Example 1. Amend a federal tax return At age 65, Barbara bought for $21,053 an annuity with a refund feature. Amend a federal tax return She will get $100 a month for life. Amend a federal tax return 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. Amend a federal tax return In this case, the contract cost and the total guaranteed return are the same ($21,053). Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return 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). Amend a federal tax return 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. Amend a federal tax return Example 2. Amend a federal tax return John died while still employed. Amend a federal tax return His widow, Eleanor, age 48, receives $171 a month for the rest of her life. Amend a federal tax return John's son, Elmer, age 9, receives $50 a month until he reaches age 18. Amend a federal tax return John's contributions to the retirement fund totaled $7,559. Amend a federal tax return 45, with interest on those contributions of $1,602. Amend a federal tax return 53. Amend a federal tax return The guarantee or total refund feature of the contract is $9,161. Amend a federal tax return 98 ($7,559. Amend a federal tax return 45 plus $1,602. Amend a federal tax return 53). Amend a federal tax return 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. Amend a federal tax return 9 $71,614. Amend a federal tax return 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. Amend a federal tax return 0 5,400. Amend a federal tax return 00   3) Total expected return   $77,014. Amend a federal tax return 80 B) Adjustment for refund feature:       1) Contributions (net cost) $7,559. Amend a federal tax return 45   2) Guaranteed amount (contributions of $7,559. Amend a federal tax return 45 plus interest of $1,602. Amend a federal tax return 53) $9,161. Amend a federal tax return 98   3) Minus: Expected return under child's (temporary life) annuity (A(2)) 5,400. Amend a federal tax return 00   4) Net guaranteed amount $3,761. Amend a federal tax return 98   5) Multiple from Table VII (nearest age 48 for 2 years duration (recovery of $3,761. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return See the discussion of expected return, later in this publication. Amend a federal tax return Free IRS help. Amend a federal tax return   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. Amend a federal tax return Expected Return Your expected return is the total amount you and other eligible annuitants can expect to receive under the contract. Amend a federal tax return The following discussions explain how to figure the expected return with each type of annuity. Amend a federal tax return A person's age, for purposes of figuring the expected return, is the age at the birthday nearest to the annuity starting date. Amend a federal tax return Fixed period annuity. Amend a federal tax return   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. Amend a federal tax return It is the total amount you will get beginning at the annuity starting date. Amend a federal tax return You will receive specific periodic payments for a definite period of time, such as a fixed number of months (but not less than 13). Amend a federal tax return 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. Amend a federal tax return Single life annuity. Amend a federal tax return   If you are to get annuity payments for the rest of your life, find your expected return as follows. Amend a federal tax return You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. Amend a federal tax return These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later). Amend a federal tax return   You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. Amend a federal tax return See Adjustments to Tables I, II, V, VI, and VIA following Table I. Amend a federal tax return Example. Amend a federal tax return Henry bought an annuity contract that will give him an annuity of $500 a month for his life. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return 2 multiple by +. Amend a federal tax return 1. Amend a federal tax return His expected return would then be $115,800 ($6,000 × 19. Amend a federal tax return 3). Amend a federal tax return Annuity for shorter of life or specified period. Amend a federal tax return   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. Amend a federal tax return To figure your expected return, multiply the amount of your annual payment by a multiple in Table IV or VIII for temporary life annuities. Amend a federal tax return 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. Amend a federal tax return Example. Amend a federal tax return Harriet purchased an annuity this year that will pay her $200 each month for five years or until she dies, whichever period is shorter. Amend a federal tax return She was age 65 at her birthday nearest the annuity starting date. Amend a federal tax return 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. Amend a federal tax return 9 Expected return $11,760 She uses Table VIII (not Table IV) because all her contributions were made after June 30, 1986. Amend a federal tax return See Special Elections, later. Amend a federal tax return Joint and survivor annuities. Amend a federal tax return   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. Amend a federal tax return To figure the expected return, multiply the annual payment by a multiple in Table II or VI based on your joint life expectancies. Amend a federal tax return If your payments are made quarterly, semiannually, or annually, you may need to adjust these multiples. Amend a federal tax return See Adjustments to Tables I, II, V, VI, and VIA following Table I near the end of this publication. Amend a federal tax return Example. Amend a federal tax return 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. Amend a federal tax return At John's annuity starting date, his age at his nearest birthday is 70 and his wife's at her nearest birthday is 67. Amend a federal tax return The expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table VI, ages 67 and 70 × 22. Amend a federal tax return 0 Expected return $132,000 Different payments to survivor. Amend a federal tax return   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. Amend a federal tax return Example 1. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return 0 Multiple for Gerald, age 70 (from Table V)   16. Amend a federal tax return 0 Difference: Multiple applicable to Mary   6. Amend a federal tax return 0 Gerald's annual payment ($500 × 12) $6,000   Gerald's multiple 16. Amend a federal tax return 0   Gerald's expected return   $96,000 Mary's annual payment ($350 × 12) $4,200   Mary's multiple 6. Amend a federal tax return 0   Mary's expected return   25,200 Total expected return under the contract   $121,200 Example 2. Amend a federal tax return Your husband died while still employed. Amend a federal tax return 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. Amend a federal tax return Your daughters, Marie and Jean, are each entitled to immediate temporary life annuities of $150 a month until they reach age 18. Amend a federal tax return You were 50 years old at the annuity starting date. Amend a federal tax return Marie was 16 and Jean was 14. Amend a federal tax return 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. Amend a federal tax return 1 × $4,800 annual payment) $158,880 Marie, age 16 for 2 years duration (multiple from Table VIII—2. Amend a federal tax return 0 × $1,800 annual payment) 3,600 Jean, age 14 for 4 years duration (multiple from Table VIII—4. Amend a federal tax return 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. Amend a federal tax return Computation Under the General Rule Note. Amend a federal tax return Variable annuities use a different computation for determining the exclusion amounts. Amend a federal tax return See Variable annuities later. Amend a federal tax return Under the General Rule, you figure the taxable part of your annuity by using the following steps: Step 1. Amend a federal tax return   Figure the amount of your investment in the contract, including any adjustments for the refund feature and the death benefit exclusion, if applicable. Amend a federal tax return See Death benefit exclusion , earlier. Amend a federal tax return Step 2. Amend a federal tax return   Figure your expected return. Amend a federal tax return Step 3. Amend a federal tax return   Divide Step 1 by Step 2 and round to three decimal places. Amend a federal tax return This will give you the exclusion percentage. Amend a federal tax return Step 4. Amend a federal tax return   Multiply the exclusion percentage by the first regular periodic payment. Amend a federal tax return The result is the tax-free part of each pension or annuity payment. Amend a federal tax return   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. Amend a federal tax return 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. Amend a federal tax return   Each annuitant applies the same exclusion percentage to his or her initial payment called for in the contract. Amend a federal tax return Step 5. Amend a federal tax return   Multiply the tax-free part of each payment (step 4) by the number of payments received during the year. Amend a federal tax return This will give you the tax-free part of the total payment for the year. Amend a federal tax return    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. Amend a federal tax return This fractional amount is multiplied by your exclusion percentage to get the tax-free part. Amend a federal tax return Step 6. Amend a federal tax return   Subtract the tax-free part from the total payment you received. Amend a federal tax return The rest is the taxable part of your pension or annuity. Amend a federal tax return Example 1. Amend a federal tax return You purchased an annuity with an investment in the contract of $10,800. Amend a federal tax return Under its terms, the annuity will pay you $100 a month for life. Amend a federal tax return The multiple for your age (age 65) is 20. Amend a federal tax return 0 as shown in Table V. Amend a federal tax return Your expected return is $24,000 (20 × 12 × $100). Amend a federal tax return Your cost of $10,800, divided by your expected return of $24,000, equals 45. Amend a federal tax return 0%. Amend a federal tax return This is the percentage you will not have to include in income. Amend a federal tax return 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. Amend a federal tax return If you had received only six payments of $100 ($600) during the year, your exclusion would have been $270 (45% of $100 × 6 payments). Amend a federal tax return Example 2. Amend a federal tax return Gerald bought a joint and survivor annuity. Amend a federal tax return Gerald's investment in the contract is $62,712 and the expected return is $121,200. Amend a federal tax return The exclusion percentage is 51. Amend a federal tax return 7% ($62,712 ÷ $121,200). Amend a federal tax return Gerald will receive $500 a month ($6,000 a year). Amend a federal tax return Each year, until his net cost is recovered, $3,102 (51. Amend a federal tax return 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. Amend a federal tax return If Gerald dies, his wife will receive $350 a month ($4,200 a year). Amend a federal tax return If Gerald had not recovered all of his net cost before his death, his wife will use the same exclusion percentage (51. Amend a federal tax return 7%). Amend a federal tax return Each year, until the entire net cost is recovered, his wife will receive $2,171. Amend a federal tax return 40 (51. Amend a federal tax return 7% of her payments received of $4,200) tax free. Amend a federal tax return She will include $2,028. Amend a federal tax return 60 ($4,200 − $2,171. Amend a federal tax return 40) in her income tax return. Amend a federal tax return Example 3. Amend a federal tax return 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. Amend a federal tax return Your two daughters each receive annual annuities of $1,800 until they reach age 18. Amend a federal tax return Your husband contributed $25,576 to the plan. Amend a federal tax return You are eligible for the $5,000 death benefit exclusion because your husband died before August 21, 1996. Amend a federal tax return 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. Amend a federal tax return The exclusion percentage of 18. Amend a federal tax return 0% ($30,576 ÷ $169,680) applies to the annuity payments you and each of your daughters receive. Amend a federal tax return Each full year $864 (18. Amend a federal tax return 0% × $4,800) will be tax free to you, and you must include $3,936 in your income tax return. Amend a federal tax return Each year, until age 18, $324 (18. Amend a federal tax return 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. Amend a federal tax return Part-year payments. Amend a federal tax return   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. Amend a federal tax return   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. Amend a federal tax return 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. Amend a federal tax return   If you received a fractional payment, follow Step 5, discussed earlier. Amend a federal tax return This gives you the tax-free part of your total payment. Amend a federal tax return Example. Amend a federal tax return On September 28, Mary bought an annuity contract for $22,050 that will give her $125 a month for life, beginning October 30. Amend a federal tax return The applicable multiple from Table V is 23. Amend a federal tax return 3 (age 61). Amend a federal tax return Her expected return is $34,950 ($125 × 12 × 23. Amend a federal tax return 3). Amend a federal tax return Mary's investment in the contract of $22,050, divided by her expected return of $34,950, equals 63. Amend a federal tax return 1%. Amend a federal tax return Each payment received will consist of 63. Amend a federal tax return 1% return of cost and 36. Amend a federal tax return 9% taxable income, until her net cost of the contract is fully recovered. Amend a federal tax return During the first year, Mary received three payments of $125, or $375, of which $236. Amend a federal tax return 63 (63. Amend a federal tax return 1% × $375) is a return of cost. Amend a federal tax return The remaining $138. Amend a federal tax return 37 is included in income. Amend a federal tax return Increase in annuity payments. Amend a federal tax return   The tax-free amount remains the same as the amount figured at the annuity starting date, even if the payment increases. Amend a federal tax return All increases in the installment payments are fully taxable. Amend a federal tax return   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. Amend a federal tax return 72-5(a)(5) of the regulations. Amend a federal tax return Example. Amend a federal tax return Joe's wife died while she was still employed and, as her beneficiary, he began receiving an annuity of $147 per month. Amend a federal tax return In figuring the taxable part, Joe elects to use Tables V through VIII. Amend a federal tax return The cost of the contract was $7,938, consisting of the sum of his wife's net contributions, adjusted for any refund feature. Amend a federal tax return His expected return as of the annuity starting date is $35,280 (age 65, multiple of 20. Amend a federal tax return 0 × $1,764 annual payment). Amend a federal tax return The exclusion percentage is $7,938 ÷ $35,280, or 22. Amend a federal tax return 5%. Amend a federal tax return During the year he received 11 monthly payments of $147, or $1,617. Amend a federal tax return Of this amount, 22. Amend a federal tax return 5% × $147 × 11 ($363. Amend a federal tax return 83) is tax free as a return of cost and the balance of $1,253. Amend a federal tax return 17 is taxable. Amend a federal tax return Later, because of a cost-of-living increase, his annuity payment was increased to $166 per month, or $1,992 a year (12 × $166). Amend a federal tax return The tax-free part is still only 22. Amend a federal tax return 5% of the annuity payments as of the annuity starting date (22. Amend a federal tax return 5% × $147 × 12 = $396. Amend a federal tax return 90 for a full year). Amend a federal tax return The increase of $228 ($1,992 − $1,764 (12 × $147)) is fully taxable. Amend a federal tax return Variable annuities. Amend a federal tax return   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. Amend a federal tax return   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. Amend a federal tax return If the annuity is for life, you determine the total number of payments by using a multiple from the appropriate actuarial table. Amend a federal tax return Example. Amend a federal tax return Frank purchased a variable annuity at age 65. Amend a federal tax return The total cost of the contract was $12,000. Amend a federal tax return The annuity starting date is January 1 of the year of purchase. Amend a federal tax return His annuity will be paid, starting July 1, in variable annual installments for his life. Amend a federal tax return 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. Amend a federal tax return   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. Amend a federal tax return 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. Amend a federal tax return The result is added to the previously figured periodic tax-free part. Amend a federal tax return The sum is the amount of each future payment that will be tax free. Amend a federal tax return Example. Amend a federal tax return 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. Amend a federal tax return Frank does not pay tax on the $500 (second year) payment because $600 of each annual pension payment is tax free. Amend a federal tax return 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. Amend a federal tax return 00 Amount received in second year 500. Amend a federal tax return 00 Difference $100. Amend a federal tax return 00 Number of remaining payments after the first 2 payments (age 67, from Table V) 18. Amend a federal tax return 4 Amount to be added to previously determined annual tax-free part ($100 ÷ 18. Amend a federal tax return 4) $5. Amend a federal tax return 43 Revised annual tax-free part for third and later years ($600 + $5. Amend a federal tax return 43) $605. Amend a federal tax return 43 Amount taxable in third year ($1,200 − $605. Amend a federal tax return 43) $594. Amend a federal tax return 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. Amend a federal tax return 72–4(d)(3) of the Income Tax Regulations. Amend a federal tax return The statement must also show the following information: The annuity starting date and your age on that date. Amend a federal tax return The first day of the first period for which you received an annuity payment in the current year. Amend a federal tax return Your investment in the contract as originally figured. Amend a federal tax return 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. Amend a federal tax return Exclusion Limits Your annuity starting date determines the total amount of annuity income that you can exclude from income over the years. Amend a federal tax return Exclusion limited to net cost. Amend a federal tax return   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). Amend a federal tax return This is the unrecovered investment in the contract as of the annuity starting date. Amend a federal tax return   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. Amend a federal tax return This deduction is not subject to the 2%-of-adjusted-gross-income limit. Amend a federal tax return Example 1. Amend a federal tax return Your annuity starting date is after 1986. Amend a federal tax return Your total cost is $12,500, and your net cost is $10,000, taking into account certain adjustments. Amend a federal tax return There is no refund feature. Amend a federal tax return Your monthly annuity payment is $833. Amend a federal tax return 33. Amend a federal tax return Your exclusion ratio is 12% and you exclude $100 a month. Amend a federal tax return Your exclusion ends after 100 months, when you have excluded your net cost of $10,000. Amend a federal tax return Thereafter, your annuity payments are fully taxable. Amend a federal tax return Example 2. Amend a federal tax return 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. Amend a federal tax return The adjustment for the refund feature is $1,000, so the investment in the contract is $9,000. Amend a federal tax return The exclusion ratio is 10. Amend a federal tax return 8%, and your monthly exclusion is $90. Amend a federal tax return After 5 years (60 months), you have recovered tax free only $5,400 ($90 x 60). Amend a federal tax return 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. Amend a federal tax return Your unrecovered investment is determined without regard to the refund feature adjustment, discussed earlier, under Adjustments. Amend a federal tax return Exclusion not limited to net cost. Amend a federal tax return   If your annuity starting date was before 1987, you could continue to take your monthly exclusion for as long as you receive your annuity. Amend a federal tax return If you choose a joint and survivor annuity, your survivor continues to take the survivor's exclusion figured as of the annuity starting date. Amend a federal tax return The total exclusion may be more than your investment in the contract. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return These tables correspond to the old Tables I through IV. Amend a federal tax return In general, Tables V through VIII must be used if you made contributions to the retirement plan after June 30, 1986. Amend a federal tax return If you made no contributions to the plan after June 30, 1986, generally you must use only Tables I through IV. Amend a federal tax return 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). Amend a federal tax return 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. Amend a federal tax return Contributions made both before July 1986 and after June 1986. Amend a federal tax return   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. Amend a federal tax return (See the examples below. Amend a federal tax return )    Making the election. Amend a federal tax return 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. Amend a federal tax return 72–6 of the Income Tax Regulations. Amend a federal tax return ”   The statement must also include your name, address, social security number, and the amount of the pre-July 1986 investment in the contract. Amend a federal tax return   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. Amend a federal tax return 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. Amend a federal tax return    Advantages of election. Amend a federal tax return 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. Amend a federal tax return    If you intend to make this election, save your records that substantiate your pre-July 1986 and post-June 1986 contributions. Amend a federal tax return 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. Amend a federal tax return   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. Amend a federal tax return Example 1. Amend a federal tax return Bill, who is single, contributed $42,000 to the retirement plan and will receive an annual annuity of $24,000 for life. Amend a federal tax return Payment of the $42,000 contribution is guaranteed under a refund feature. Amend a federal tax return Bill is 55 years old as of the annuity starting date. Amend a federal tax return 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. Amend a federal tax return       Pre- July 1986   Post- June 1986 A. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return Expected return         1) Annual annuity receivable $24,000   $24,000   2) Multiples from Tables I and V 21. Amend a federal tax return 7   28. Amend a federal tax return 6   3) Expected return, C(1) × C(2) $520,800   $686,400 D. Amend a federal tax return Tax-free part of annuity         1) Exclusion ratio as decimal,  B(3) ÷ C(3) . Amend a federal tax return 079   . Amend a federal tax return 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). Amend a federal tax return The taxable part of his annuity is $22,080 ($24,000 minus $1,920). Amend a federal tax return 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). Amend a federal tax return Example 2. Amend a federal tax return Al is age 62 at his nearest birthday to the annuity starting date. Amend a federal tax return Al's wife is age 60 at her nearest birthday to the annuity starting date. Amend a federal tax return 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. Amend a federal tax return The pre-July 1986 investment in the contract is $53,100 and the post-June 1986 investment in the contract is $7,000. Amend a federal tax return Al makes the election described in Example 1 . Amend a federal tax return For purposes of this example, assume the refund feature adjustment is zero. Amend a federal tax return If an adjustment is required, IRS will figure the amount. Amend a federal tax return See Requesting a Ruling on Taxation of Annuity near the end of this publication. Amend a federal tax return       Pre-  July 1986   Post-  June 1986 A. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return Expected return         1) Multiple for both annuitants from Tables II and VI 25. Amend a federal tax return 4   28. Amend a federal tax return 8   2) Multiple for first annuitant from Tables I and V 16. Amend a federal tax return 9   22. Amend a federal tax return 5   3) Multiple applicable to surviving annuitant, subtract C(2) from C(1) 8. Amend a federal tax return 5   6. Amend a federal tax return 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. Amend a federal tax return Tax-free part of annuity         1) Exclusion ratio as a decimal, B(3) ÷ C(8) . Amend a federal tax return 209   . Amend a federal tax return 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). Amend a federal tax return The taxable part of his annuity is $9,216 ($12,000 − $2,784). Amend a federal tax return 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. Amend a federal tax return After Al's death, his widow will apply the same exclusion percentages (20. Amend a federal tax return 9% and 2. Amend a federal tax return 3%) to her annual annuity of $6,000 to figure the tax-free part of her annuity. Amend a federal tax return Annuity received after June 30, 1986. Amend a federal tax return   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. Amend a federal tax return Once made, you cannot revoke the election, which will apply to all payments during the year and in any later year. Amend a federal tax return    Make the election by attaching the following statement to your income tax return. Amend a federal tax return    “I elect, under section 1. Amend a federal tax return 72–9 of the Income Tax Regulations, to treat my entire cost of the contract as a post-June 1986 cost of the plan. Amend a federal tax return ”   The statement must also include your name, address, and social security number. Amend a federal tax return   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. Amend a federal tax return Disqualifying form of payment or settlement. Amend a federal tax return   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. Amend a federal tax return See regulations section 1. Amend a federal tax return 72–6(d)(3) for additional examples of disqualifying forms of payment or settlement. Amend a federal tax return You can find the Income Tax Regulations in many libraries and at Internal Revenue Service Offices. Amend a federal tax return Worksheets for Determining Taxable Annuity Worksheets I and II. Amend a federal tax return   Worksheets I and II follow for determining your taxable annuity under Regulations Section 1. Amend a federal tax return 72–6(d)(6) Election. Amend a federal tax return Worksheet I For Determining Taxable Annuity Under Regulations Section 1. Amend a federal tax return 72-6(d)(6) Election For Single Annuitant With No Survivor Annuity               Pre-July 1986   Post-June 1986 A. Amend a federal tax return   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. Amend a federal tax return )             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. Amend a federal tax return If not, the IRS will calculate the refund feature percentage. Amend a federal tax return             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. Amend a federal tax return   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. Amend a federal tax return   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. Amend a federal tax return   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. Amend a federal tax return     Worksheet II For Determining Taxable Annuity Under Regulations Section 1. Amend a federal tax return 72-6(d)(6) Election For Joint and Survivor Annuity               Pre-July 1986   Post-June 1986 A. Amend a federal tax return   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. Amend a federal tax return )             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. Amend a federal tax return If not, the IRS will calculate the refund feature percentage. Amend a federal tax return             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. Amend a federal tax return   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. Amend a federal tax return   Expected Return             1)   Multiples for both annuitants, Tables II and VI             2)   Multiple for retiree. Amend a federal tax return 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. Amend a federal tax return   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. Amend a federal tax return   Actuarial Tables Please click here for the text description of the image. Amend a federal tax return Actuarial Tables Please click here for the text description of the image. Amend a federal tax return Actuarial Tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. 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Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return Actuarial tables Please click here for the text description of the image. Amend a federal tax return 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. Amend a federal tax return If you make this request, you are asking for a ruling. Amend a federal tax return User fee. Amend a federal tax return   Under the law in effect at the time this publication went to print, the IRS must charge a user fee for all ruling requests. Amend a federal tax return You should call the IRS for the proper fee. Amend a federal tax return A request solely for the value of the refund feature is not treated as a ruling request and requires no fee. Amend a federal tax return Send your request to:     Internal Revenue Service  Attention: EP Letter Rulings P. Amend a federal tax return O. Amend a federal tax return 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. Amend a federal tax return When to make the request. Amend a federal tax return   Please note that requests sent between February 1 and April 15 may experience some delay. Amend a federal tax return We process requests in the order received, and we will reply to your request as soon as we can process it. Amend a federal tax return 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. Amend a federal tax return S. Amend a federal tax return Individual Income Tax Return, to get an extension of time to file. Amend a federal tax return Information you must furnish. Amend a federal tax return   You must furnish the information listed below so the IRS can comply with your request. Amend a federal tax return Failure to furnish the information will result in a delay in processing your request. Amend a federal tax return 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. Amend a federal tax return Copies of any documents showing distributions, annuity rates, and annuity options available to you. Amend a federal tax return A copy of any Form 1099–R you received since your annuity began. Amend a federal tax return A statement indicating whether you have filed your return for the year for which you are making the request. Amend a federal tax return If you have requested an extension of time to file that return, please indicate the extension date. Amend a federal tax return Your daytime phone number. Amend a federal tax return Your current mailing address. Amend a federal tax return A power of attorney if someone other than you, an attorney, a certified public accountant, or an enrolled agent is signing this request. Amend a federal tax return Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose. Amend a federal tax return A completed Tax Information Sheet (or facsimile) shown on the next page. Amend a federal tax return Sign and date the Disclosure and Perjury Statement (or facsimile) at the end of the tax information sheet. Amend a federal tax return This statement must be signed by the retiree or the survivor annuitant. Amend a federal tax return It cannot be signed by a representative. Amend a federal tax return Tax Information Sheet Please click here for the text description of the image. Amend a federal tax return Tax Information Sheet Please click here for the text description of the image. Amend a federal tax return 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. Amend a federal tax return Free help with your tax return. Amend a federal tax return   You can get free help preparing your return nationwide from IRS-certified volunteers. Amend a federal tax return The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Amend a federal tax return The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Amend a federal tax return 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. Amend a federal tax return In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Amend a federal tax return To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Amend a federal tax return gov, download the IRS2Go app, or call 1-800-906-9887. Amend a federal tax return   As part of the TCE program, AARP offers the Tax-Aide counseling program. Amend a federal tax return To find the nearest AARP Tax-Aide site, visit AARP's website at www. Amend a federal tax return aarp. Amend a federal tax return org/money/taxaide or call 1-888-227-7669. Amend a federal tax return For more information on these programs, go to IRS. Amend a federal tax return gov and enter “VITA” in the search box. Amend a federal tax return Internet. Amend a federal tax return    IRS. Amend a federal tax return gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Amend a federal tax return Download the free IRS2Go app from the iTunes app store or from Google Play. Amend a federal tax return 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. Amend a federal tax return Check the status of your 2013 refund with the Where's My Refund? application on IRS. Amend a federal tax return gov or download the IRS2Go app and select the Refund Status option. Amend a federal tax return The IRS issues more than 9 out of 10 refunds in less than 21 days. Amend a federal tax return 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. Amend a federal tax return You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Amend a federal tax return The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Amend a federal tax return Use the Interactive Tax Assistant (ITA) to research your tax questions. Amend a federal tax return No need to wait on the phone or stand in line. Amend a federal tax return 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. Amend a federal tax return When you reach the response screen, you can print the entire interview and the final response for your records. Amend a federal tax return New subject areas are added on a regular basis. Amend a federal tax return  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Amend a federal tax return gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Amend a federal tax return You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Amend a federal tax return The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Amend a federal tax return 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. Amend a federal tax return 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. Amend a federal tax return You can also ask the IRS to mail a return or an account transcript to you. Amend a federal tax return Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Amend a federal tax return gov or by calling 1-800-908-9946. Amend a federal tax return Tax return and tax account transcripts are generally available for the current year and the past three years. Amend a federal tax return Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Amend a federal tax return Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Amend a federal tax return 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. Amend a federal tax return Check the status of your amended return using Where's My Amended Return? Go to IRS. Amend a federal tax return gov and enter Where's My Amended Return? in the search box. Amend a federal tax return You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Amend a federal tax return It can take up to 3 weeks from the date you mailed it to show up in our system. Amend a federal tax return Make a payment using one of several safe and convenient electronic payment options available on IRS. Amend a federal tax return gov. Amend a federal tax return Select the Payment tab on the front page of IRS. Amend a federal tax return gov for more information. Amend a federal tax return Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Amend a federal tax return Figure your income tax withholding with the IRS Withholding Calculator on IRS. Amend a federal tax return gov. Amend a federal tax return 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. Amend a federal tax return Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Amend a federal tax return gov. Amend a federal tax return Request an Electronic Filing PIN by going to IRS. Amend a federal tax return gov and entering Electronic Filing PIN in the search box. Amend a federal tax return Download forms, instructions and publications, including accessible versions for people with disabilities. Amend a federal tax return Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Amend a federal tax return gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Amend a federal tax return An employee can answer questions about your tax account or help you set up a payment plan. Amend a federal tax return Before you visit, check the Office Locator on IRS. Amend a federal tax return gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Amend a federal tax return If you have a special need, such as a disability, you can request an appointment. Amend a federal tax return Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Amend a federal tax return Apply for an Employer Identification Number (EIN). Amend a federal tax return Go to IRS. Amend a federal tax return gov and enter Apply for an EIN in the search box. Amend a federal tax return Read the Internal Revenue Code, regulations, or other official guidance. Amend a federal tax return Read Internal Revenue Bulletins. Amend a federal tax return Sign up to receive local and national tax news and more by email. Amend a federal tax return Just click on “subscriptions” above the search box on IRS. Amend a federal tax return gov and choose from a variety of options. Amend a federal tax return    Phone. Amend a federal tax return You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Amend a federal tax return Download the free IRS2Go app from the iTunes app store or from Google Play. Amend a federal tax return Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Amend a federal tax return gov, or download the IRS2Go app. Amend a federal tax return 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. Amend a federal tax return The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Amend a federal tax return Mos
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Understanding Your CP279 Notice

CP279 is the notice of acceptance to the parent corporation of a Qualified Subchapter S Subsidiary (QSub) from Form 8869, Qualified Subchapter S Subsidiary Election.


What you need to do

  • Retain this notice in your permanent records.
  • Notify IRS of necessary changes via Form 8822-B, Change of Address or Responsible Party – Business.

You may want to

Supply your subsidiary corporation with a copy of this notice.


Answers to Common Questions

Q. How do I report the activity of my subsidiary?

A. Subsidiary information should be reported on Form 851, Affiliations Schedule, and other necessary schedules.

 

Page Last Reviewed or Updated: 12-Feb-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Amend A Federal Tax Return

Amend a federal tax return Publication 925 - Introductory Material Table of Contents Future Developments Reminders IntroductionOrdering forms and publications. Amend a federal tax return Tax questions. Amend a federal tax return Useful Items - You may want to see: Future Developments For the latest developments related to Publication 925, such as legislation enacted after it was published, go to www. Amend a federal tax return irs. Amend a federal tax return gov/pub925. Amend a federal tax return Reminders At-risk amounts. Amend a federal tax return  The following rules apply to amounts borrowed after May 3, 2004. Amend a federal tax return You must file Form 6198, At-Risk Limitations, if you are engaged in an activity included in (6) under Activities Covered by the At-Risk Rules and you have borrowed certain amounts described in Certain borrowed amounts excluded under At-Risk Amounts in this publication. Amend a federal tax return You may be considered at risk for certain amounts described in Certain borrowed amounts excluded under At-Risk Amounts secured by real property used in the activity of holding real property (other than mineral property) that, if nonrecourse, would be qualified nonrecourse financing. Amend a federal tax return Photographs of missing children. Amend a federal tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Amend a federal tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Amend a federal tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Amend a federal tax return Introduction This publication discusses two sets of rules that may limit the amount of your deductible loss from a trade, business, rental, or other income-producing activity. Amend a federal tax return The first part of the publication discusses the passive activity rules. Amend a federal tax return The second part discusses the at-risk rules. Amend a federal tax return However, when you figure your allowable losses from any activity, you must apply the at-risk rules before the passive activity rules. Amend a federal tax return Comments and suggestions. Amend a federal tax return   We welcome your comments about this publication and your suggestions for future editions. Amend a federal tax return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Amend a federal tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Amend a federal tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Amend a federal tax return   You can send your comments from www. Amend a federal tax return irs. Amend a federal tax return gov/formspubs/. Amend a federal tax return Click on “More Information” and then on “Comment on Tax Forms and Publications. Amend a federal tax return ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Amend a federal tax return Ordering forms and publications. Amend a federal tax return   Visit www. Amend a federal tax return irs. Amend a federal tax return gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Amend a federal tax return Internal Revenue Service 1201 N. Amend a federal tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Amend a federal tax return   If you have a tax question, check the information available on IRS. Amend a federal tax return gov or call 1-800-829-1040. Amend a federal tax return We cannot answer tax questions sent to either of the above addresses. Amend a federal tax return Useful Items - You may want to see: Publication 527 Residential Rental Property (Including Rental of Vacation Homes) 541 Partnerships Form (and Instructions) 4952 Investment Interest Expense Deduction 6198 At-Risk Limitations 8582 Passive Activity Loss Limitations 8582-CR Passive Activity Credit Limitations 8810 Corporate Passive Activity Loss and Credit Limitations 8949 Sales and Other Dispositions of Capital Assets See How To Get Tax Help near the end of this publication for information about getting these publications and forms. Amend a federal tax return Prev  Up  Next   Home   More Online Publications