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1040nr online filing free 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. 1040nr online filing free A pension is generally a series of payments made to you after you retire from work. 1040nr online filing free Pension payments are made regularly and are for past services with an employer. 1040nr online filing free An annuity is a series of payments under a contract. 1040nr online filing free You can buy the contract alone or you can buy it with the help of your employer. 1040nr online filing free Annuity payments are made regularly for more than one full year. 1040nr online filing free Note. 1040nr online filing free Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted. 1040nr online filing free Types of pensions and annuities. 1040nr online filing free   Particular types of pensions and annuities include: Fixed period annuities. 1040nr online filing free You receive definite amounts at regular intervals for a definite length of time. 1040nr online filing free Annuities for a single life. 1040nr online filing free You receive definite amounts at regular intervals for life. 1040nr online filing free The payments end at death. 1040nr online filing free Joint and survivor annuities. 1040nr online filing free The first annuitant receives a definite amount at regular intervals for life. 1040nr online filing free After he or she dies, a second annuitant receives a definite amount at regular intervals for life. 1040nr online filing free The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. 1040nr online filing free Variable annuities. 1040nr online filing free You receive payments that may vary in amount for a definite length of time or for life. 1040nr online filing free The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds or cost-of-living indexes. 1040nr online filing free Disability pensions. 1040nr online filing free You are under minimum retirement age and receive payments because you retired on disability. 1040nr online filing free 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. 1040nr online filing free If your annuity starting date is after November 18, 1996, the General Rule cannot be used for the following qualified plans. 1040nr online filing free 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. 1040nr online filing free This plan must meet Internal Revenue Code requirements. 1040nr online filing free It qualifies for special tax benefits, including tax deferral for employer contributions and rollover distributions. 1040nr online filing free However, you must use the General Rule if you were 75 or over and the annuity payments are guaranteed for more than 5 years. 1040nr online filing free A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. 1040nr online filing free A tax-sheltered annuity is a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization. 1040nr online filing free   The General Rule is used to figure the tax treatment of various types of pensions and annuities, including nonqualified employee plans. 1040nr online filing free A nonqualified employee plan is an employer's plan that does not meet Internal Revenue Code requirements. 1040nr online filing free It does not qualify for most of the tax benefits of a qualified plan. 1040nr online filing free Annuity worksheets. 1040nr online filing free   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. 1040nr online filing free Request for a ruling. 1040nr online filing free   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. 1040nr online filing free This is treated as a request for a ruling. 1040nr online filing free See Requesting a Ruling on Taxation of Annuity near the end of this publication. 1040nr online filing free Withholding tax and estimated tax. 1040nr online filing free   Your pension or annuity is subject to federal income tax withholding unless you choose not to have tax withheld. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free 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). 1040nr online filing free These payments are also known as amounts received as an annuity. 1040nr online filing free 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. 1040nr online filing free In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments. 1040nr online filing free The amount of each payment that is more than the part that represents your net cost is taxable. 1040nr online filing free 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. 1040nr online filing free These terms are explained in the following discussions. 1040nr online filing free 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. 1040nr online filing free First, find your net cost of the contract as of the annuity starting date (defined later). 1040nr online filing free To find this amount, you must first figure the total premiums, contributions, or other amounts paid. 1040nr online filing free This includes the amounts your employer contributed if you were required to include these amounts in income. 1040nr online filing free It also includes amounts you actually contributed (except amounts for health and accident benefits and deductible voluntary employee contributions). 1040nr online filing free 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. 1040nr online filing free Any additional premiums paid for double indemnity or disability benefits. 1040nr online filing free Any other tax-free amounts you received under the contract or plan before the later of the dates in (1). 1040nr online filing free 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. 1040nr online filing free Example. 1040nr online filing free 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. 1040nr online filing free The annuity starting date is July 1. 1040nr online filing free This is the date you use in figuring your investment in the contract and your expected return (discussed later). 1040nr online filing free Adjustments If any of the following items apply, adjust (add or subtract) your total cost to find your net cost. 1040nr online filing free Foreign employment. 1040nr online filing free   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. 1040nr online filing free 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. 1040nr online filing free Foreign employment contributions while a nonresident alien. 1040nr online filing free   In determining your cost, special rules apply if you are a U. 1040nr online filing free S. 1040nr online filing free citizen or resident alien who received distributions from a plan to which contributions were made while you were a nonresident alien. 1040nr online filing free 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. 1040nr online filing free Death benefit exclusion. 1040nr online filing free   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. 1040nr online filing free The beneficiary of a deceased employee who died after August 20, 1996, will not qualify for the death benefit exclusion. 1040nr online filing free How to adjust your total cost. 1040nr online filing free   If you are eligible, treat the amount of any allowable death benefit exclusion as additional cost paid by the employee. 1040nr online filing free Add it to the cost or unrecovered cost of the annuity at the annuity starting date. 1040nr online filing free See Example 3 under Computation Under General Rule for an illustration of the adjustment to the cost of the contract. 1040nr online filing free Net cost. 1040nr online filing free   Your total cost plus certain adjustments and minus other amounts already recovered before the annuity starting date is your net cost. 1040nr online filing free This is the unrecovered investment in the contract as of the annuity starting date. 1040nr online filing free If your annuity starting date is after 1986, this is the maximum amount that you may recover tax free under the contract. 1040nr online filing free Refund feature. 1040nr online filing free   Adjustment for the value of the refund feature is only applicable when you report your pension or annuity under the General Rule. 1040nr online filing free 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. 1040nr online filing free   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. 1040nr online filing free Zero value of refund feature. 1040nr online filing free   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. 1040nr online filing free   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). 1040nr online filing free   If you do not meet these requirements, you will have to figure the value of the refund feature, as explained in the following discussion. 1040nr online filing free Examples. 1040nr online filing free The first example shows how to figure the value of the refund feature when there is only one beneficiary. 1040nr online filing free 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. 1040nr online filing free In both examples, the taxpayer elects to use Tables V through VIII. 1040nr online filing free 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. 1040nr online filing free Example 1. 1040nr online filing free At age 65, Barbara bought for $21,053 an annuity with a refund feature. 1040nr online filing free She will get $100 a month for life. 1040nr online filing free 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. 1040nr online filing free In this case, the contract cost and the total guaranteed return are the same ($21,053). 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free 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). 1040nr online filing free 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. 1040nr online filing free Example 2. 1040nr online filing free John died while still employed. 1040nr online filing free His widow, Eleanor, age 48, receives $171 a month for the rest of her life. 1040nr online filing free John's son, Elmer, age 9, receives $50 a month until he reaches age 18. 1040nr online filing free John's contributions to the retirement fund totaled $7,559. 1040nr online filing free 45, with interest on those contributions of $1,602. 1040nr online filing free 53. 1040nr online filing free The guarantee or total refund feature of the contract is $9,161. 1040nr online filing free 98 ($7,559. 1040nr online filing free 45 plus $1,602. 1040nr online filing free 53). 1040nr online filing free 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. 1040nr online filing free 9 $71,614. 1040nr online filing free 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. 1040nr online filing free 0 5,400. 1040nr online filing free 00   3) Total expected return   $77,014. 1040nr online filing free 80 B) Adjustment for refund feature:       1) Contributions (net cost) $7,559. 1040nr online filing free 45   2) Guaranteed amount (contributions of $7,559. 1040nr online filing free 45 plus interest of $1,602. 1040nr online filing free 53) $9,161. 1040nr online filing free 98   3) Minus: Expected return under child's (temporary life) annuity (A(2)) 5,400. 1040nr online filing free 00   4) Net guaranteed amount $3,761. 1040nr online filing free 98   5) Multiple from Table VII (nearest age 48 for 2 years duration (recovery of $3,761. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free See the discussion of expected return, later in this publication. 1040nr online filing free Free IRS help. 1040nr online filing free   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. 1040nr online filing free Expected Return Your expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 1040nr online filing free The following discussions explain how to figure the expected return with each type of annuity. 1040nr online filing free A person's age, for purposes of figuring the expected return, is the age at the birthday nearest to the annuity starting date. 1040nr online filing free Fixed period annuity. 1040nr online filing free   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. 1040nr online filing free It is the total amount you will get beginning at the annuity starting date. 1040nr online filing free You will receive specific periodic payments for a definite period of time, such as a fixed number of months (but not less than 13). 1040nr online filing free 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. 1040nr online filing free Single life annuity. 1040nr online filing free   If you are to get annuity payments for the rest of your life, find your expected return as follows. 1040nr online filing free You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. 1040nr online filing free These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later). 1040nr online filing free   You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. 1040nr online filing free See Adjustments to Tables I, II, V, VI, and VIA following Table I. 1040nr online filing free Example. 1040nr online filing free Henry bought an annuity contract that will give him an annuity of $500 a month for his life. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free 2 multiple by +. 1040nr online filing free 1. 1040nr online filing free His expected return would then be $115,800 ($6,000 × 19. 1040nr online filing free 3). 1040nr online filing free Annuity for shorter of life or specified period. 1040nr online filing free   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. 1040nr online filing free To figure your expected return, multiply the amount of your annual payment by a multiple in Table IV or VIII for temporary life annuities. 1040nr online filing free 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. 1040nr online filing free Example. 1040nr online filing free Harriet purchased an annuity this year that will pay her $200 each month for five years or until she dies, whichever period is shorter. 1040nr online filing free She was age 65 at her birthday nearest the annuity starting date. 1040nr online filing free 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. 1040nr online filing free 9 Expected return $11,760 She uses Table VIII (not Table IV) because all her contributions were made after June 30, 1986. 1040nr online filing free See Special Elections, later. 1040nr online filing free Joint and survivor annuities. 1040nr online filing free   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. 1040nr online filing free To figure the expected return, multiply the annual payment by a multiple in Table II or VI based on your joint life expectancies. 1040nr online filing free If your payments are made quarterly, semiannually, or annually, you may need to adjust these multiples. 1040nr online filing free See Adjustments to Tables I, II, V, VI, and VIA following Table I near the end of this publication. 1040nr online filing free Example. 1040nr online filing free 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. 1040nr online filing free At John's annuity starting date, his age at his nearest birthday is 70 and his wife's at her nearest birthday is 67. 1040nr online filing free The expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table VI, ages 67 and 70 × 22. 1040nr online filing free 0 Expected return $132,000 Different payments to survivor. 1040nr online filing free   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. 1040nr online filing free Example 1. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free 0 Multiple for Gerald, age 70 (from Table V)   16. 1040nr online filing free 0 Difference: Multiple applicable to Mary   6. 1040nr online filing free 0 Gerald's annual payment ($500 × 12) $6,000   Gerald's multiple 16. 1040nr online filing free 0   Gerald's expected return   $96,000 Mary's annual payment ($350 × 12) $4,200   Mary's multiple 6. 1040nr online filing free 0   Mary's expected return   25,200 Total expected return under the contract   $121,200 Example 2. 1040nr online filing free Your husband died while still employed. 1040nr online filing free 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. 1040nr online filing free Your daughters, Marie and Jean, are each entitled to immediate temporary life annuities of $150 a month until they reach age 18. 1040nr online filing free You were 50 years old at the annuity starting date. 1040nr online filing free Marie was 16 and Jean was 14. 1040nr online filing free 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. 1040nr online filing free 1 × $4,800 annual payment) $158,880 Marie, age 16 for 2 years duration (multiple from Table VIII—2. 1040nr online filing free 0 × $1,800 annual payment) 3,600 Jean, age 14 for 4 years duration (multiple from Table VIII—4. 1040nr online filing free 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. 1040nr online filing free Computation Under the General Rule Note. 1040nr online filing free Variable annuities use a different computation for determining the exclusion amounts. 1040nr online filing free See Variable annuities later. 1040nr online filing free Under the General Rule, you figure the taxable part of your annuity by using the following steps: Step 1. 1040nr online filing free   Figure the amount of your investment in the contract, including any adjustments for the refund feature and the death benefit exclusion, if applicable. 1040nr online filing free See Death benefit exclusion , earlier. 1040nr online filing free Step 2. 1040nr online filing free   Figure your expected return. 1040nr online filing free Step 3. 1040nr online filing free   Divide Step 1 by Step 2 and round to three decimal places. 1040nr online filing free This will give you the exclusion percentage. 1040nr online filing free Step 4. 1040nr online filing free   Multiply the exclusion percentage by the first regular periodic payment. 1040nr online filing free The result is the tax-free part of each pension or annuity payment. 1040nr online filing free   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. 1040nr online filing free 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. 1040nr online filing free   Each annuitant applies the same exclusion percentage to his or her initial payment called for in the contract. 1040nr online filing free Step 5. 1040nr online filing free   Multiply the tax-free part of each payment (step 4) by the number of payments received during the year. 1040nr online filing free This will give you the tax-free part of the total payment for the year. 1040nr online filing free    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. 1040nr online filing free This fractional amount is multiplied by your exclusion percentage to get the tax-free part. 1040nr online filing free Step 6. 1040nr online filing free   Subtract the tax-free part from the total payment you received. 1040nr online filing free The rest is the taxable part of your pension or annuity. 1040nr online filing free Example 1. 1040nr online filing free You purchased an annuity with an investment in the contract of $10,800. 1040nr online filing free Under its terms, the annuity will pay you $100 a month for life. 1040nr online filing free The multiple for your age (age 65) is 20. 1040nr online filing free 0 as shown in Table V. 1040nr online filing free Your expected return is $24,000 (20 × 12 × $100). 1040nr online filing free Your cost of $10,800, divided by your expected return of $24,000, equals 45. 1040nr online filing free 0%. 1040nr online filing free This is the percentage you will not have to include in income. 1040nr online filing free 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. 1040nr online filing free If you had received only six payments of $100 ($600) during the year, your exclusion would have been $270 (45% of $100 × 6 payments). 1040nr online filing free Example 2. 1040nr online filing free Gerald bought a joint and survivor annuity. 1040nr online filing free Gerald's investment in the contract is $62,712 and the expected return is $121,200. 1040nr online filing free The exclusion percentage is 51. 1040nr online filing free 7% ($62,712 ÷ $121,200). 1040nr online filing free Gerald will receive $500 a month ($6,000 a year). 1040nr online filing free Each year, until his net cost is recovered, $3,102 (51. 1040nr online filing free 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. 1040nr online filing free If Gerald dies, his wife will receive $350 a month ($4,200 a year). 1040nr online filing free If Gerald had not recovered all of his net cost before his death, his wife will use the same exclusion percentage (51. 1040nr online filing free 7%). 1040nr online filing free Each year, until the entire net cost is recovered, his wife will receive $2,171. 1040nr online filing free 40 (51. 1040nr online filing free 7% of her payments received of $4,200) tax free. 1040nr online filing free She will include $2,028. 1040nr online filing free 60 ($4,200 − $2,171. 1040nr online filing free 40) in her income tax return. 1040nr online filing free Example 3. 1040nr online filing free 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. 1040nr online filing free Your two daughters each receive annual annuities of $1,800 until they reach age 18. 1040nr online filing free Your husband contributed $25,576 to the plan. 1040nr online filing free You are eligible for the $5,000 death benefit exclusion because your husband died before August 21, 1996. 1040nr online filing free 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. 1040nr online filing free The exclusion percentage of 18. 1040nr online filing free 0% ($30,576 ÷ $169,680) applies to the annuity payments you and each of your daughters receive. 1040nr online filing free Each full year $864 (18. 1040nr online filing free 0% × $4,800) will be tax free to you, and you must include $3,936 in your income tax return. 1040nr online filing free Each year, until age 18, $324 (18. 1040nr online filing free 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. 1040nr online filing free Part-year payments. 1040nr online filing free   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. 1040nr online filing free   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. 1040nr online filing free 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. 1040nr online filing free   If you received a fractional payment, follow Step 5, discussed earlier. 1040nr online filing free This gives you the tax-free part of your total payment. 1040nr online filing free Example. 1040nr online filing free On September 28, Mary bought an annuity contract for $22,050 that will give her $125 a month for life, beginning October 30. 1040nr online filing free The applicable multiple from Table V is 23. 1040nr online filing free 3 (age 61). 1040nr online filing free Her expected return is $34,950 ($125 × 12 × 23. 1040nr online filing free 3). 1040nr online filing free Mary's investment in the contract of $22,050, divided by her expected return of $34,950, equals 63. 1040nr online filing free 1%. 1040nr online filing free Each payment received will consist of 63. 1040nr online filing free 1% return of cost and 36. 1040nr online filing free 9% taxable income, until her net cost of the contract is fully recovered. 1040nr online filing free During the first year, Mary received three payments of $125, or $375, of which $236. 1040nr online filing free 63 (63. 1040nr online filing free 1% × $375) is a return of cost. 1040nr online filing free The remaining $138. 1040nr online filing free 37 is included in income. 1040nr online filing free Increase in annuity payments. 1040nr online filing free   The tax-free amount remains the same as the amount figured at the annuity starting date, even if the payment increases. 1040nr online filing free All increases in the installment payments are fully taxable. 1040nr online filing free   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. 1040nr online filing free 72-5(a)(5) of the regulations. 1040nr online filing free Example. 1040nr online filing free Joe's wife died while she was still employed and, as her beneficiary, he began receiving an annuity of $147 per month. 1040nr online filing free In figuring the taxable part, Joe elects to use Tables V through VIII. 1040nr online filing free The cost of the contract was $7,938, consisting of the sum of his wife's net contributions, adjusted for any refund feature. 1040nr online filing free His expected return as of the annuity starting date is $35,280 (age 65, multiple of 20. 1040nr online filing free 0 × $1,764 annual payment). 1040nr online filing free The exclusion percentage is $7,938 ÷ $35,280, or 22. 1040nr online filing free 5%. 1040nr online filing free During the year he received 11 monthly payments of $147, or $1,617. 1040nr online filing free Of this amount, 22. 1040nr online filing free 5% × $147 × 11 ($363. 1040nr online filing free 83) is tax free as a return of cost and the balance of $1,253. 1040nr online filing free 17 is taxable. 1040nr online filing free Later, because of a cost-of-living increase, his annuity payment was increased to $166 per month, or $1,992 a year (12 × $166). 1040nr online filing free The tax-free part is still only 22. 1040nr online filing free 5% of the annuity payments as of the annuity starting date (22. 1040nr online filing free 5% × $147 × 12 = $396. 1040nr online filing free 90 for a full year). 1040nr online filing free The increase of $228 ($1,992 − $1,764 (12 × $147)) is fully taxable. 1040nr online filing free Variable annuities. 1040nr online filing free   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. 1040nr online filing free   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. 1040nr online filing free If the annuity is for life, you determine the total number of payments by using a multiple from the appropriate actuarial table. 1040nr online filing free Example. 1040nr online filing free Frank purchased a variable annuity at age 65. 1040nr online filing free The total cost of the contract was $12,000. 1040nr online filing free The annuity starting date is January 1 of the year of purchase. 1040nr online filing free His annuity will be paid, starting July 1, in variable annual installments for his life. 1040nr online filing free 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. 1040nr online filing free   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. 1040nr online filing free 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. 1040nr online filing free The result is added to the previously figured periodic tax-free part. 1040nr online filing free The sum is the amount of each future payment that will be tax free. 1040nr online filing free Example. 1040nr online filing free 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. 1040nr online filing free Frank does not pay tax on the $500 (second year) payment because $600 of each annual pension payment is tax free. 1040nr online filing free 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. 1040nr online filing free 00 Amount received in second year 500. 1040nr online filing free 00 Difference $100. 1040nr online filing free 00 Number of remaining payments after the first 2 payments (age 67, from Table V) 18. 1040nr online filing free 4 Amount to be added to previously determined annual tax-free part ($100 ÷ 18. 1040nr online filing free 4) $5. 1040nr online filing free 43 Revised annual tax-free part for third and later years ($600 + $5. 1040nr online filing free 43) $605. 1040nr online filing free 43 Amount taxable in third year ($1,200 − $605. 1040nr online filing free 43) $594. 1040nr online filing free 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. 1040nr online filing free 72–4(d)(3) of the Income Tax Regulations. 1040nr online filing free The statement must also show the following information: The annuity starting date and your age on that date. 1040nr online filing free The first day of the first period for which you received an annuity payment in the current year. 1040nr online filing free Your investment in the contract as originally figured. 1040nr online filing free 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. 1040nr online filing free Exclusion Limits Your annuity starting date determines the total amount of annuity income that you can exclude from income over the years. 1040nr online filing free Exclusion limited to net cost. 1040nr online filing free   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). 1040nr online filing free This is the unrecovered investment in the contract as of the annuity starting date. 1040nr online filing free   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. 1040nr online filing free This deduction is not subject to the 2%-of-adjusted-gross-income limit. 1040nr online filing free Example 1. 1040nr online filing free Your annuity starting date is after 1986. 1040nr online filing free Your total cost is $12,500, and your net cost is $10,000, taking into account certain adjustments. 1040nr online filing free There is no refund feature. 1040nr online filing free Your monthly annuity payment is $833. 1040nr online filing free 33. 1040nr online filing free Your exclusion ratio is 12% and you exclude $100 a month. 1040nr online filing free Your exclusion ends after 100 months, when you have excluded your net cost of $10,000. 1040nr online filing free Thereafter, your annuity payments are fully taxable. 1040nr online filing free Example 2. 1040nr online filing free 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. 1040nr online filing free The adjustment for the refund feature is $1,000, so the investment in the contract is $9,000. 1040nr online filing free The exclusion ratio is 10. 1040nr online filing free 8%, and your monthly exclusion is $90. 1040nr online filing free After 5 years (60 months), you have recovered tax free only $5,400 ($90 x 60). 1040nr online filing free 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. 1040nr online filing free Your unrecovered investment is determined without regard to the refund feature adjustment, discussed earlier, under Adjustments. 1040nr online filing free Exclusion not limited to net cost. 1040nr online filing free   If your annuity starting date was before 1987, you could continue to take your monthly exclusion for as long as you receive your annuity. 1040nr online filing free If you choose a joint and survivor annuity, your survivor continues to take the survivor's exclusion figured as of the annuity starting date. 1040nr online filing free The total exclusion may be more than your investment in the contract. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free These tables correspond to the old Tables I through IV. 1040nr online filing free In general, Tables V through VIII must be used if you made contributions to the retirement plan after June 30, 1986. 1040nr online filing free If you made no contributions to the plan after June 30, 1986, generally you must use only Tables I through IV. 1040nr online filing free 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). 1040nr online filing free 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. 1040nr online filing free Contributions made both before July 1986 and after June 1986. 1040nr online filing free   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. 1040nr online filing free (See the examples below. 1040nr online filing free )    Making the election. 1040nr online filing free 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. 1040nr online filing free 72–6 of the Income Tax Regulations. 1040nr online filing free ”   The statement must also include your name, address, social security number, and the amount of the pre-July 1986 investment in the contract. 1040nr online filing free   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. 1040nr online filing free 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. 1040nr online filing free    Advantages of election. 1040nr online filing free 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. 1040nr online filing free    If you intend to make this election, save your records that substantiate your pre-July 1986 and post-June 1986 contributions. 1040nr online filing free 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. 1040nr online filing free   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. 1040nr online filing free Example 1. 1040nr online filing free Bill, who is single, contributed $42,000 to the retirement plan and will receive an annual annuity of $24,000 for life. 1040nr online filing free Payment of the $42,000 contribution is guaranteed under a refund feature. 1040nr online filing free Bill is 55 years old as of the annuity starting date. 1040nr online filing free 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. 1040nr online filing free       Pre- July 1986   Post- June 1986 A. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free Expected return         1) Annual annuity receivable $24,000   $24,000   2) Multiples from Tables I and V 21. 1040nr online filing free 7   28. 1040nr online filing free 6   3) Expected return, C(1) × C(2) $520,800   $686,400 D. 1040nr online filing free Tax-free part of annuity         1) Exclusion ratio as decimal,  B(3) ÷ C(3) . 1040nr online filing free 079   . 1040nr online filing free 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). 1040nr online filing free The taxable part of his annuity is $22,080 ($24,000 minus $1,920). 1040nr online filing free 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). 1040nr online filing free Example 2. 1040nr online filing free Al is age 62 at his nearest birthday to the annuity starting date. 1040nr online filing free Al's wife is age 60 at her nearest birthday to the annuity starting date. 1040nr online filing free 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. 1040nr online filing free The pre-July 1986 investment in the contract is $53,100 and the post-June 1986 investment in the contract is $7,000. 1040nr online filing free Al makes the election described in Example 1 . 1040nr online filing free For purposes of this example, assume the refund feature adjustment is zero. 1040nr online filing free If an adjustment is required, IRS will figure the amount. 1040nr online filing free See Requesting a Ruling on Taxation of Annuity near the end of this publication. 1040nr online filing free       Pre-  July 1986   Post-  June 1986 A. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free Expected return         1) Multiple for both annuitants from Tables II and VI 25. 1040nr online filing free 4   28. 1040nr online filing free 8   2) Multiple for first annuitant from Tables I and V 16. 1040nr online filing free 9   22. 1040nr online filing free 5   3) Multiple applicable to surviving annuitant, subtract C(2) from C(1) 8. 1040nr online filing free 5   6. 1040nr online filing free 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. 1040nr online filing free Tax-free part of annuity         1) Exclusion ratio as a decimal, B(3) ÷ C(8) . 1040nr online filing free 209   . 1040nr online filing free 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). 1040nr online filing free The taxable part of his annuity is $9,216 ($12,000 − $2,784). 1040nr online filing free 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. 1040nr online filing free After Al's death, his widow will apply the same exclusion percentages (20. 1040nr online filing free 9% and 2. 1040nr online filing free 3%) to her annual annuity of $6,000 to figure the tax-free part of her annuity. 1040nr online filing free Annuity received after June 30, 1986. 1040nr online filing free   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. 1040nr online filing free Once made, you cannot revoke the election, which will apply to all payments during the year and in any later year. 1040nr online filing free    Make the election by attaching the following statement to your income tax return. 1040nr online filing free    “I elect, under section 1. 1040nr online filing free 72–9 of the Income Tax Regulations, to treat my entire cost of the contract as a post-June 1986 cost of the plan. 1040nr online filing free ”   The statement must also include your name, address, and social security number. 1040nr online filing free   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. 1040nr online filing free Disqualifying form of payment or settlement. 1040nr online filing free   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. 1040nr online filing free See regulations section 1. 1040nr online filing free 72–6(d)(3) for additional examples of disqualifying forms of payment or settlement. 1040nr online filing free You can find the Income Tax Regulations in many libraries and at Internal Revenue Service Offices. 1040nr online filing free Worksheets for Determining Taxable Annuity Worksheets I and II. 1040nr online filing free   Worksheets I and II follow for determining your taxable annuity under Regulations Section 1. 1040nr online filing free 72–6(d)(6) Election. 1040nr online filing free Worksheet I For Determining Taxable Annuity Under Regulations Section 1. 1040nr online filing free 72-6(d)(6) Election For Single Annuitant With No Survivor Annuity               Pre-July 1986   Post-June 1986 A. 1040nr online filing free   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 1040nr online filing free )             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. 1040nr online filing free If not, the IRS will calculate the refund feature percentage. 1040nr online filing free             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 1040nr online filing free   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. 1040nr online filing free   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. 1040nr online filing free   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. 1040nr online filing free     Worksheet II For Determining Taxable Annuity Under Regulations Section 1. 1040nr online filing free 72-6(d)(6) Election For Joint and Survivor Annuity               Pre-July 1986   Post-June 1986 A. 1040nr online filing free   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 1040nr online filing free )             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. 1040nr online filing free If not, the IRS will calculate the refund feature percentage. 1040nr online filing free             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 1040nr online filing free   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. 1040nr online filing free   Expected Return             1)   Multiples for both annuitants, Tables II and VI             2)   Multiple for retiree. 1040nr online filing free 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. 1040nr online filing free   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. 1040nr online filing free   Actuarial Tables Please click here for the text description of the image. 1040nr online filing free Actuarial Tables Please click here for the text description of the image. 1040nr online filing free Actuarial Tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 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1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free Actuarial tables Please click here for the text description of the image. 1040nr online filing free 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. 1040nr online filing free If you make this request, you are asking for a ruling. 1040nr online filing free User fee. 1040nr online filing free   Under the law in effect at the time this publication went to print, the IRS must charge a user fee for all ruling requests. 1040nr online filing free You should call the IRS for the proper fee. 1040nr online filing free A request solely for the value of the refund feature is not treated as a ruling request and requires no fee. 1040nr online filing free Send your request to:     Internal Revenue Service  Attention: EP Letter Rulings P. 1040nr online filing free O. 1040nr online filing free 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. 1040nr online filing free When to make the request. 1040nr online filing free   Please note that requests sent between February 1 and April 15 may experience some delay. 1040nr online filing free We process requests in the order received, and we will reply to your request as soon as we can process it. 1040nr online filing free 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. 1040nr online filing free S. 1040nr online filing free Individual Income Tax Return, to get an extension of time to file. 1040nr online filing free Information you must furnish. 1040nr online filing free   You must furnish the information listed below so the IRS can comply with your request. 1040nr online filing free Failure to furnish the information will result in a delay in processing your request. 1040nr online filing free 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. 1040nr online filing free Copies of any documents showing distributions, annuity rates, and annuity options available to you. 1040nr online filing free A copy of any Form 1099–R you received since your annuity began. 1040nr online filing free A statement indicating whether you have filed your return for the year for which you are making the request. 1040nr online filing free If you have requested an extension of time to file that return, please indicate the extension date. 1040nr online filing free Your daytime phone number. 1040nr online filing free Your current mailing address. 1040nr online filing free A power of attorney if someone other than you, an attorney, a certified public accountant, or an enrolled agent is signing this request. 1040nr online filing free Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose. 1040nr online filing free A completed Tax Information Sheet (or facsimile) shown on the next page. 1040nr online filing free Sign and date the Disclosure and Perjury Statement (or facsimile) at the end of the tax information sheet. 1040nr online filing free This statement must be signed by the retiree or the survivor annuitant. 1040nr online filing free It cannot be signed by a representative. 1040nr online filing free Tax Information Sheet Please click here for the text description of the image. 1040nr online filing free Tax Information Sheet Please click here for the text description of the image. 1040nr online filing free 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. 1040nr online filing free Free help with your tax return. 1040nr online filing free   You can get free help preparing your return nationwide from IRS-certified volunteers. 1040nr online filing free The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 1040nr online filing free The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040nr online filing free 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. 1040nr online filing free In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 1040nr online filing free To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 1040nr online filing free gov, download the IRS2Go app, or call 1-800-906-9887. 1040nr online filing free   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040nr online filing free To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040nr online filing free aarp. 1040nr online filing free org/money/taxaide or call 1-888-227-7669. 1040nr online filing free For more information on these programs, go to IRS. 1040nr online filing free gov and enter “VITA” in the search box. 1040nr online filing free Internet. 1040nr online filing free    IRS. 1040nr online filing free gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 1040nr online filing free Download the free IRS2Go app from the iTunes app store or from Google Play. 1040nr online filing free 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. 1040nr online filing free Check the status of your 2013 refund with the Where's My Refund? application on IRS. 1040nr online filing free gov or download the IRS2Go app and select the Refund Status option. 1040nr online filing free The IRS issues more than 9 out of 10 refunds in less than 21 days. 1040nr online filing free 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. 1040nr online filing free You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040nr online filing free The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 1040nr online filing free Use the Interactive Tax Assistant (ITA) to research your tax questions. 1040nr online filing free No need to wait on the phone or stand in line. 1040nr online filing free 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. 1040nr online filing free When you reach the response screen, you can print the entire interview and the final response for your records. 1040nr online filing free New subject areas are added on a regular basis. 1040nr online filing free  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 1040nr online filing free gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 1040nr online filing free You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 1040nr online filing free The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 1040nr online filing free 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. 1040nr online filing free 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. 1040nr online filing free You can also ask the IRS to mail a return or an account transcript to you. 1040nr online filing free Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 1040nr online filing free gov or by calling 1-800-908-9946. 1040nr online filing free Tax return and tax account transcripts are generally available for the current year and the past three years. 1040nr online filing free Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 1040nr online filing free Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 1040nr online filing free 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. 1040nr online filing free Check the status of your amended return using Where's My Amended Return? Go to IRS. 1040nr online filing free gov and enter Where's My Amended Return? in the search box. 1040nr online filing free You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 1040nr online filing free It can take up to 3 weeks from the date you mailed it to show up in our system. 1040nr online filing free Make a payment using one of several safe and convenient electronic payment options available on IRS. 1040nr online filing free gov. 1040nr online filing free Select the Payment tab on the front page of IRS. 1040nr online filing free gov for more information. 1040nr online filing free Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 1040nr online filing free Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040nr online filing free gov. 1040nr online filing free 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. 1040nr online filing free Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040nr online filing free gov. 1040nr online filing free Request an Electronic Filing PIN by going to IRS. 1040nr online filing free gov and entering Electronic Filing PIN in the search box. 1040nr online filing free Download forms, instructions and publications, including accessible versions for people with disabilities. 1040nr online filing free Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 1040nr online filing free gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 1040nr online filing free An employee can answer questions about your tax account or help you set up a payment plan. 1040nr online filing free Before you visit, check the Office Locator on IRS. 1040nr online filing free gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 1040nr online filing free If you have a special need, such as a disability, you can request an appointment. 1040nr online filing free Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 1040nr online filing free Apply for an Employer Identification Number (EIN). 1040nr online filing free Go to IRS. 1040nr online filing free gov and enter Apply for an EIN in the search box. 1040nr online filing free Read the Internal Revenue Code, regulations, or other official guidance. 1040nr online filing free Read Internal Revenue Bulletins. 1040nr online filing free Sign up to receive local and national tax news and more by email. 1040nr online filing free Just click on “subscriptions” above the search box on IRS. 1040nr online filing free gov and choose from a variety of options. 1040nr online filing free    Phone. 1040nr online filing free You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 1040nr online filing free Download the free IRS2Go app from the iTunes app store or from Google Play. 1040nr online filing free Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 1040nr online filing free gov, or download the IRS2Go app. 1040nr online filing free 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. 1040nr online filing free The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040nr online filing free Mos
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1040nr online filing free Index A Assistance (see Tax help) B Base amount, Base amount. 1040nr online filing free C Canadian social security benefits, Canadian or German social security benefits paid to U. 1040nr online filing free S. 1040nr online filing free residents. 1040nr online filing free Children's benefits, Children's benefits. 1040nr online filing free Comments on publication, Comments and suggestions. 1040nr online filing free D Deductions related to benefits, Deductions Related to Your Benefits $3,000 or less, Deduction $3,000 or less. 1040nr online filing free $3,000. 1040nr online filing free 01 or more, Deduction more than $3,000. 1040nr online filing free Disability benefits repaid, Disability payments. 1040nr online filing free E Estimated tax, Tax withholding and estimated tax. 1040nr online filing free F Form 1040, Reporting on Form 1040. 1040nr online filing free Form 1040A, Reporting on Form 1040A. 1040nr online filing free Form RRB-1042S, Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) Form RRB-1099, Lump-sum payment reported on Form SSA-1099 or RRB-1099. 1040nr online filing free , Form RRB-1099, Payments by the Railroad Retirement Board 2013 Form SSA-1042S, Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Form SSA-1099, Lump-sum payment reported on Form SSA-1099 or RRB-1099. 1040nr online filing free , Appendix Form W-4V, Tax withholding and estimated tax. 1040nr online filing free Free tax services, Free help with your tax return. 1040nr online filing free Future developments Product page, Reminders G German social security benefits, Canadian or German social security benefits paid to U. 1040nr online filing free S. 1040nr online filing free residents. 1040nr online filing free H Help (see Tax help) J Joint returns, Joint return. 1040nr online filing free L Legal expenses, Legal expenses. 1040nr online filing free Lump-sum election, Lump-Sum Election Example, Example M Missing children, photographs of, Reminders N Nonresident aliens, Nonresident aliens. 1040nr online filing free Form RRB-1042S, Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) Form SSA-1042S, Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Nontaxable benefits, Benefits not taxable. 1040nr online filing free P Permanent resident aliens, Lawful permanent residents. 1040nr online filing free Publications (see Tax help) R Railroad retirement benefits, Introduction Repayments Benefits received in earlier year, Repayment of benefits. 1040nr online filing free , Repayment of benefits received in an earlier year. 1040nr online filing free Disability benefits, Disability payments. 1040nr online filing free Gross benefits, Repayment of benefits. 1040nr online filing free , Repayments More Than Gross Benefits Reporting requirements, How To Report Your Benefits Lump-sum payment, Lump-sum payment reported on Form SSA-1099 or RRB-1099. 1040nr online filing free S Social Security benefits, Introduction Suggestions for publication, Comments and suggestions. 1040nr online filing free T Tax help, How To Get Tax Help Taxable benefits Determination of, Are Any of Your Benefits Taxable?, How Much Is Taxable? Maximum taxable part, Maximum taxable part. 1040nr online filing free Person receiving benefits determines, Who is taxed. 1040nr online filing free Worksheets, Worksheet A. 1040nr online filing free Examples, Examples, Worksheets Which to use, Which worksheet to use. 1040nr online filing free Total income, figuring, Figuring total income. 1040nr online filing free TTY/TDD information, How To Get Tax Help U U. 1040nr online filing free S. 1040nr online filing free citizens residing abroad, U. 1040nr online filing free S. 1040nr online filing free citizens residing abroad. 1040nr online filing free U. 1040nr online filing free S. 1040nr online filing free residents Canadian or German social security benefits paid to, Canadian or German social security benefits paid to U. 1040nr online filing free S. 1040nr online filing free residents. 1040nr online filing free W Withholding, Tax withholding and estimated tax. 1040nr online filing free Exemption from, Exemption from withholding. 1040nr online filing free Form W-4V, Tax withholding and estimated tax. 1040nr online filing free Voluntary, Tax withholding and estimated tax. 1040nr online filing free Worksheets Taxable benefits Blank Worksheet 1, Worksheets Filled-in Worksheet 1, Filled-in Worksheet 1. 1040nr online filing free Figuring Your Taxable Benefits, Filled-in Worksheet 1. 1040nr online filing free Figuring Your Taxable Benefits, Filled-in Worksheet 1. 1040nr online filing free Figuring Your Taxable Benefits, Filled-in Worksheet 1. 1040nr online filing free Figuring Your Taxable Benefits Quick calculation, sample, Worksheet A. 1040nr online filing free Prev  Up     Home   More Online Publications