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2012 Tax Forms 1040 Ez

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2012 Tax Forms 1040 Ez

2012 tax forms 1040 ez Internal Revenue Bulletin:  2013-12  March 18, 2013  Rev. 2012 tax forms 1040 ez Proc. 2012 tax forms 1040 ez 2013-21 Table of Contents SECTION 1. 2012 tax forms 1040 ez PURPOSE SECTION 2. 2012 tax forms 1040 ez BACKGROUND SECTION 3. 2012 tax forms 1040 ez SCOPE SECTION 4. 2012 tax forms 1040 ez APPLICATION. 2012 tax forms 1040 ez 01 Limitations on Depreciation Deductions for Certain Automobiles. 2012 tax forms 1040 ez . 2012 tax forms 1040 ez 02 Inclusions in Income of Lessees of Passenger Automobiles. 2012 tax forms 1040 ez SECTION 5. 2012 tax forms 1040 ez EFFECTIVE DATE SECTION 6. 2012 tax forms 1040 ez DRAFTING INFORMATION SECTION 1. 2012 tax forms 1040 ez PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2013, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2013, including a separate table of inclusion amounts for lessees of trucks and vans. 2012 tax forms 1040 ez The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. 2012 tax forms 1040 ez SECTION 2. 2012 tax forms 1040 ez BACKGROUND . 2012 tax forms 1040 ez 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. 2012 tax forms 1040 ez For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. 2012 tax forms 1040 ez The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. 2012 tax forms 1040 ez This change reflects the higher rate of price inflation for trucks and vans since 1988. 2012 tax forms 1040 ez . 2012 tax forms 1040 ez 02 Section 331(a) of the American Taxpayer Relief Act of 2012, Pub. 2012 tax forms 1040 ez L. 2012 tax forms 1040 ez No. 2012 tax forms 1040 ez 112-240, 126 Stat. 2012 tax forms 1040 ez 2313 (Jan. 2012 tax forms 1040 ez 2, 2013) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2014, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2014. 2012 tax forms 1040 ez Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. 2012 tax forms 1040 ez . 2012 tax forms 1040 ez 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). 2012 tax forms 1040 ez Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. 2012 tax forms 1040 ez Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2012, that is round 3 extension property (as defined in § 168(k)(4)(J)(iv)). 2012 tax forms 1040 ez Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. 2012 tax forms 1040 ez This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer: (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2013 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. 2012 tax forms 1040 ez . 2012 tax forms 1040 ez 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. 2012 tax forms 1040 ez The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. 2012 tax forms 1040 ez Under § 1. 2012 tax forms 1040 ez 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. 2012 tax forms 1040 ez One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. 2012 tax forms 1040 ez Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. 2012 tax forms 1040 ez SECTION 3. 2012 tax forms 1040 ez SCOPE . 2012 tax forms 1040 ez 01 The limitations on depreciation deductions in section 4. 2012 tax forms 1040 ez 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2013, and continue to apply for each taxable year that the passenger automobile remains in service. 2012 tax forms 1040 ez . 2012 tax forms 1040 ez 02 The tables in section 4. 2012 tax forms 1040 ez 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2013. 2012 tax forms 1040 ez Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. 2012 tax forms 1040 ez See Rev. 2012 tax forms 1040 ez Proc. 2012 tax forms 1040 ez 2008-22, 2008-1 C. 2012 tax forms 1040 ez B. 2012 tax forms 1040 ez 658, for passenger automobiles first leased during calendar year 2008; Rev. 2012 tax forms 1040 ez Proc. 2012 tax forms 1040 ez 2009-24, 2009-17 I. 2012 tax forms 1040 ez R. 2012 tax forms 1040 ez B. 2012 tax forms 1040 ez 885, for passenger automobiles first leased during calendar year 2009; Rev. 2012 tax forms 1040 ez Proc. 2012 tax forms 1040 ez 2010-18, 2010-09 I. 2012 tax forms 1040 ez R. 2012 tax forms 1040 ez B. 2012 tax forms 1040 ez 427, as amplified and modified by section 4. 2012 tax forms 1040 ez 03 of Rev. 2012 tax forms 1040 ez Proc. 2012 tax forms 1040 ez 2011-21, 2011-12 I. 2012 tax forms 1040 ez R. 2012 tax forms 1040 ez B. 2012 tax forms 1040 ez 560, for passenger automobiles first leased during calendar year 2010; Rev. 2012 tax forms 1040 ez Proc. 2012 tax forms 1040 ez 2011-21, for passenger automobiles first leased during calendar year 2011; and Rev. 2012 tax forms 1040 ez Proc. 2012 tax forms 1040 ez 2012-23, 2012-14 I. 2012 tax forms 1040 ez R. 2012 tax forms 1040 ez B. 2012 tax forms 1040 ez 712, for passenger automobiles first leased during calendar year 2012. 2012 tax forms 1040 ez SECTION 4. 2012 tax forms 1040 ez APPLICATION . 2012 tax forms 1040 ez 01 Limitations on Depreciation Deductions for Certain Automobiles. 2012 tax forms 1040 ez (1) Amount of the inflation adjustment. 2012 tax forms 1040 ez (a) Passenger automobiles (other than trucks or vans). 2012 tax forms 1040 ez Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. 2012 tax forms 1040 ez Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. 2012 tax forms 1040 ez The new car component of the CPI was 115. 2012 tax forms 1040 ez 2 for October 1987 and 143. 2012 tax forms 1040 ez 787 for October 2012. 2012 tax forms 1040 ez The October 2012 index exceeded the October 1987 index by 28. 2012 tax forms 1040 ez 587. 2012 tax forms 1040 ez Therefore, the automobile price inflation adjustment for 2013 for passenger automobiles (other than trucks and vans) is 24. 2012 tax forms 1040 ez 8 percent (28. 2012 tax forms 1040 ez 587/115. 2012 tax forms 1040 ez 2 x 100%). 2012 tax forms 1040 ez The dollar limitations in § 280F(a) are multiplied by a factor of 0. 2012 tax forms 1040 ez 248, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2013. 2012 tax forms 1040 ez This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2013. 2012 tax forms 1040 ez (b) Trucks and vans. 2012 tax forms 1040 ez To determine the dollar limitations for trucks and vans first placed in service during calendar year 2013, the Service uses the new truck component of the CPI instead of the new car component. 2012 tax forms 1040 ez The new truck component of the CPI was 112. 2012 tax forms 1040 ez 4 for October 1987 and 149. 2012 tax forms 1040 ez 386 for October 2012. 2012 tax forms 1040 ez The October 2012 index exceeded the October 1987 index by 36. 2012 tax forms 1040 ez 986. 2012 tax forms 1040 ez Therefore, the automobile price inflation adjustment for 2013 for trucks and vans is 32. 2012 tax forms 1040 ez 9 percent (36. 2012 tax forms 1040 ez 986/112. 2012 tax forms 1040 ez 4 x 100%). 2012 tax forms 1040 ez The dollar limitations in § 280F(a) are multiplied by a factor of 0. 2012 tax forms 1040 ez 329, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. 2012 tax forms 1040 ez This adjustment applies to all trucks and vans that are first placed in service in calendar year 2013. 2012 tax forms 1040 ez (2) Amount of the limitation. 2012 tax forms 1040 ez Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2013. 2012 tax forms 1040 ez Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction applies. 2012 tax forms 1040 ez Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction does not apply. 2012 tax forms 1040 ez REV. 2012 tax forms 1040 ez PROC. 2012 tax forms 1040 ez 2013-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. 2012 tax forms 1040 ez PROC. 2012 tax forms 1040 ez 2013-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 REV. 2012 tax forms 1040 ez PROC. 2012 tax forms 1040 ez 2013-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. 2012 tax forms 1040 ez PROC. 2012 tax forms 1040 ez 2013-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 . 2012 tax forms 1040 ez 02 Inclusions in Income of Lessees of Passenger Automobiles. 2012 tax forms 1040 ez A taxpayer must follow the procedures in § 1. 2012 tax forms 1040 ez 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2013. 2012 tax forms 1040 ez In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. 2012 tax forms 1040 ez REV. 2012 tax forms 1040 ez PROC. 2012 tax forms 1040 ez 2013-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 2 4 6 7 8 19,500 20,000 2 5 6 9 9 20,000 20,500 2 5 8 9 11 20,500 21,000 3 6 8 10 12 21,000 21,500 3 6 10 11 13 21,500 22,000 3 7 10 13 14 22,000 23,000 4 8 11 14 16 23,000 24,000 4 9 14 16 18 24,000 25,000 5 10 15 18 21 25,000 26,000 5 12 16 21 23 26,000 27,000 6 12 19 23 25 27,000 28,000 6 14 20 25 28 28,000 29,000 7 15 22 27 30 29,000 30,000 7 16 24 29 33 30,000 31,000 8 17 26 31 35 31,000 32,000 8 19 27 33 38 32,000 33,000 9 20 29 35 40 33,000 34,000 10 21 31 37 43 34,000 35,000 10 22 33 39 45 35,000 36,000 11 23 35 41 48 36,000 37,000 11 25 36 43 50 37,000 38,000 12 26 38 45 53 38,000 39,000 12 27 40 47 55 39,000 40,000 13 28 42 49 58 40,000 41,000 13 29 44 52 59 41,000 42,000 14 30 45 54 63 42,000 43,000 14 32 47 56 64 43,000 44,000 15 33 48 59 67 44,000 45,000 15 34 51 60 69 45,000 46,000 16 35 52 63 72 46,000 47,000 17 36 54 65 74 47,000 48,000 17 38 55 67 77 48,000 49,000 18 39 57 69 79 49,000 50,000 18 40 59 71 82 50,000 51,000 19 41 61 73 84 51,000 52,000 19 42 63 75 87 52,000 53,000 20 43 65 77 89 53,000 54,000 20 45 66 79 92 54,000 55,000 21 46 68 81 94 55,000 56,000 21 47 70 84 96 56,000 57,000 22 48 72 85 99 57,000 58,000 22 50 73 88 101 58,000 59,000 23 51 75 90 103 59,000 60,000 24 52 76 92 106 60,000 62,000 24 54 79 95 110 62,000 64,000 25 56 83 99 115 64,000 66,000 27 58 87 103 120 66,000 68,000 28 60 90 108 125 68,000 70,000 29 63 93 112 130 70,000 72,000 30 65 97 117 134 72,000 74,000 31 68 100 121 139 74,000 76,000 32 70 104 125 144 76,000 78,000 33 73 107 129 149 78,000 80,000 34 75 111 133 154 80,000 85,000 36 79 117 141 162 85,000 90,000 39 85 126 151 174 90,000 95,000 41 91 135 162 186 95,000 100,000 44 97 144 172 199 100,000 110,000 48 106 157 188 217 110,000 120,000 53 118 174 210 241 120,000 130,000 59 129 193 230 266 130,000 140,000 64 141 210 252 290 140,000 150,000 70 153 227 273 315 150,000 160,000 75 165 245 294 339 160,000 170,000 80 177 263 315 363 170,000 180,000 86 189 280 336 388 180,000 190,000 91 201 298 357 412 190,000 200,000 97 212 316 378 436 200,000 210,000 102 224 333 400 461 210,000 220,000 107 236 351 420 486 220,000 230,000 113 248 368 442 509 230,000 240,000 118 260 386 463 534 240,000 And up 124 272 403 484 558 REV. 2012 tax forms 1040 ez PROC. 2012 tax forms 1040 ez 2013-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 1 3 4 5 6 19,500 20,000 2 3 5 6 7 20,000 20,500 2 4 6 7 8 20,500 21,000 2 5 7 8 9 21,000 21,500 2 5 8 9 11 21,500 22,000 3 6 8 10 12 22,000 23,000 3 7 10 11 14 23,000 24,000 4 8 11 14 16 24,000 25,000 4 9 14 16 18 25,000 26,000 5 10 15 18 21 26,000 27,000 5 12 17 20 23 27,000 28,000 6 13 18 23 25 28,000 29,000 6 14 20 25 28 29,000 30,000 7 15 22 27 30 30,000 31,000 7 16 24 29 33 31,000 32,000 8 17 26 31 35 32,000 33,000 8 19 27 33 38 33,000 34,000 9 20 29 35 41 34,000 35,000 10 21 31 37 43 35,000 36,000 10 22 33 39 46 36,000 37,000 11 23 35 41 48 37,000 38,000 11 25 36 43 51 38,000 39,000 12 26 38 45 53 39,000 40,000 12 27 40 48 55 40,000 41,000 13 28 42 49 58 41,000 42,000 13 29 44 52 60 42,000 43,000 14 30 46 54 62 43,000 44,000 14 32 47 56 65 44,000 45,000 15 33 48 59 67 45,000 46,000 15 34 51 60 70 46,000 47,000 16 35 52 63 72 47,000 48,000 17 36 54 65 74 48,000 49,000 17 38 55 67 77 49,000 50,000 18 39 57 69 79 50,000 51,000 18 40 59 71 82 51,000 52,000 19 41 61 73 84 52,000 53,000 19 42 63 75 87 53,000 54,000 20 43 65 77 89 54,000 55,000 20 45 66 80 91 55,000 56,000 21 46 68 81 94 56,000 57,000 21 47 70 84 96 57,000 58,000 22 48 72 86 98 58,000 59,000 22 50 73 88 101 59,000 60,000 23 51 75 90 103 60,000 62,000 24 52 78 93 108 62,000 64,000 25 55 81 97 113 64,000 66,000 26 57 85 101 118 66,000 68,000 27 60 88 106 122 68,000 70,000 28 62 92 110 127 70,000 72,000 29 64 96 114 132 72,000 74,000 30 67 99 118 137 74,000 76,000 31 69 103 122 142 76,000 78,000 32 72 105 127 147 78,000 80,000 34 73 110 131 151 80,000 85,000 35 78 116 138 160 85,000 90,000 38 84 124 149 172 90,000 95,000 41 90 133 160 184 95,000 100,000 44 95 142 171 196 100,000 110,000 48 104 156 186 214 110,000 120,000 53 116 173 207 240 120,000 130,000 58 128 191 228 264 130,000 140,000 64 140 208 249 288 140,000 150,000 69 152 226 270 313 150,000 160,000 75 164 243 292 336 160,000 170,000 80 176 261 312 361 170,000 180,000 85 188 278 334 386 180,000 190,000 91 199 296 355 410 190,000 200,000 96 211 314 376 434 200,000 210,000 101 223 332 397 459 210,000 220,000 107 235 349 418 483 220,000 230,000 112 247 367 439 507 230,000 240,000 118 259 384 460 532 240,000 And up 123 271 401 482 556 SECTION 5. 2012 tax forms 1040 ez EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2013. 2012 tax forms 1040 ez SECTION 6. 2012 tax forms 1040 ez DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. 2012 tax forms 1040 ez Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). 2012 tax forms 1040 ez For further information regarding this revenue procedure, contact Mr. 2012 tax forms 1040 ez Harvey at (202) 622-4930 (not a toll-free call). 2012 tax forms 1040 ez Prev  Up  Next   Home   More Internal Revenue Bulletins
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Halloween

On Halloween—October 31—many American children dress up in funny or scary costumes and go "trick or treating" by knocking on doors in their neighborhood. The neighbors are expected to respond by giving them candy or other small gifts. Children and adults also might celebrate Halloween with costume parties.


Halloween Safety

  • Child Pedestrian Safety on Halloween
    Children are four times more likely to be in fatal pedestrian accidents on Halloween than on any other night of the year.
  • Decorative Contact Lenses – How to Buy Them Safely
    Decorative contact lenses are prescription devices that should only be purchased from authorized distributors. Using over-the-counter lenses could lead to eye damage or even blindness. Learn how to buy and use decorative contact lenses safely.
  • Halloween Food Safety
    Party food safety advice from the manager of the USDA Meat and Poultry Hotline.
  • Halloween Food Safety Tips
    Steps to help your children have a safe Halloween, and tips for Halloween parties, from the U.S. Food and Drug Administration.
  • Halloween Health and Safety Tips
    Tips to help make the festivities fun and safe for trick-or-treaters and party guests.
  • Halloween Safety Tips
    Stay safe this Halloween with safety tips from the U.S. Consumer Product Safety Commission. (PDF)
  • Makeup Safety
    Help keep your fun from leaving you with a rash, swollen eyelids, or other grief.
  • Reduce Halloween Candy Overload
    Do you want to stop children from eating too much candy this Halloween? The U.S. Department of Health and Human Services offers tips—like giving out stickers, toys, or bubbles instead of candy, and trading a toy or extra allowance for your children's candy.
  • Stay Safe and Healthy This Halloween
    Ideas for safe costumes, healthy treats, safe trick-or-treating, and staying active this Halloween, from the Centers for Disease Control and Prevention.

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Halloween Facts and Fun

  • Halloween Around the World
    Festivals commemorating the dead can be found in many cultures. Learn more from the National Endowment for the Humanities.
  • Halloween at the White House
    Photos of White House Halloween festivities from years past.
  • Halloween by the Numbers
    How many millions of pounds of pumpkins are produced each year in the U.S.? And how many pounds of candy does an American eat annually? The U.S. Census Department knows.
  • Halloween Capital of the World
    Did you know that Halloween has a capital? Find out where, from the Library of Congress.

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Especially for Kids

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History of Halloween

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Halloween Recipes

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The 2012 Tax Forms 1040 Ez

2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez A pension is generally a series of payments made to you after you retire from work. 2012 tax forms 1040 ez Pension payments are made regularly and are for past services with an employer. 2012 tax forms 1040 ez An annuity is a series of payments under a contract. 2012 tax forms 1040 ez You can buy the contract alone or you can buy it with the help of your employer. 2012 tax forms 1040 ez Annuity payments are made regularly for more than one full year. 2012 tax forms 1040 ez Note. 2012 tax forms 1040 ez Distributions from pensions and annuities follow the same rules as outlined in this publication unless otherwise noted. 2012 tax forms 1040 ez Types of pensions and annuities. 2012 tax forms 1040 ez   Particular types of pensions and annuities include: Fixed period annuities. 2012 tax forms 1040 ez You receive definite amounts at regular intervals for a definite length of time. 2012 tax forms 1040 ez Annuities for a single life. 2012 tax forms 1040 ez You receive definite amounts at regular intervals for life. 2012 tax forms 1040 ez The payments end at death. 2012 tax forms 1040 ez Joint and survivor annuities. 2012 tax forms 1040 ez The first annuitant receives a definite amount at regular intervals for life. 2012 tax forms 1040 ez After he or she dies, a second annuitant receives a definite amount at regular intervals for life. 2012 tax forms 1040 ez The amount paid to the second annuitant may or may not differ from the amount paid to the first annuitant. 2012 tax forms 1040 ez Variable annuities. 2012 tax forms 1040 ez You receive payments that may vary in amount for a definite length of time or for life. 2012 tax forms 1040 ez The amounts you receive may depend upon such variables as profits earned by the pension or annuity funds or cost-of-living indexes. 2012 tax forms 1040 ez Disability pensions. 2012 tax forms 1040 ez You are under minimum retirement age and receive payments because you retired on disability. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez If your annuity starting date is after November 18, 1996, the General Rule cannot be used for the following qualified plans. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez This plan must meet Internal Revenue Code requirements. 2012 tax forms 1040 ez It qualifies for special tax benefits, including tax deferral for employer contributions and rollover distributions. 2012 tax forms 1040 ez However, you must use the General Rule if you were 75 or over and the annuity payments are guaranteed for more than 5 years. 2012 tax forms 1040 ez A qualified employee annuity is a retirement annuity purchased by an employer for an employee under a plan that meets Internal Revenue Code requirements. 2012 tax forms 1040 ez A tax-sheltered annuity is a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization. 2012 tax forms 1040 ez   The General Rule is used to figure the tax treatment of various types of pensions and annuities, including nonqualified employee plans. 2012 tax forms 1040 ez A nonqualified employee plan is an employer's plan that does not meet Internal Revenue Code requirements. 2012 tax forms 1040 ez It does not qualify for most of the tax benefits of a qualified plan. 2012 tax forms 1040 ez Annuity worksheets. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez Request for a ruling. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez This is treated as a request for a ruling. 2012 tax forms 1040 ez See Requesting a Ruling on Taxation of Annuity near the end of this publication. 2012 tax forms 1040 ez Withholding tax and estimated tax. 2012 tax forms 1040 ez   Your pension or annuity is subject to federal income tax withholding unless you choose not to have tax withheld. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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). 2012 tax forms 1040 ez These payments are also known as amounts received as an annuity. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez In general, you can recover your net cost of the pension or annuity tax free over the period you are to receive the payments. 2012 tax forms 1040 ez The amount of each payment that is more than the part that represents your net cost is taxable. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez These terms are explained in the following discussions. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez First, find your net cost of the contract as of the annuity starting date (defined later). 2012 tax forms 1040 ez To find this amount, you must first figure the total premiums, contributions, or other amounts paid. 2012 tax forms 1040 ez This includes the amounts your employer contributed if you were required to include these amounts in income. 2012 tax forms 1040 ez It also includes amounts you actually contributed (except amounts for health and accident benefits and deductible voluntary employee contributions). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Any additional premiums paid for double indemnity or disability benefits. 2012 tax forms 1040 ez Any other tax-free amounts you received under the contract or plan before the later of the dates in (1). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez The annuity starting date is July 1. 2012 tax forms 1040 ez This is the date you use in figuring your investment in the contract and your expected return (discussed later). 2012 tax forms 1040 ez Adjustments If any of the following items apply, adjust (add or subtract) your total cost to find your net cost. 2012 tax forms 1040 ez Foreign employment. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Foreign employment contributions while a nonresident alien. 2012 tax forms 1040 ez   In determining your cost, special rules apply if you are a U. 2012 tax forms 1040 ez S. 2012 tax forms 1040 ez citizen or resident alien who received distributions from a plan to which contributions were made while you were a nonresident alien. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Death benefit exclusion. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez The beneficiary of a deceased employee who died after August 20, 1996, will not qualify for the death benefit exclusion. 2012 tax forms 1040 ez How to adjust your total cost. 2012 tax forms 1040 ez   If you are eligible, treat the amount of any allowable death benefit exclusion as additional cost paid by the employee. 2012 tax forms 1040 ez Add it to the cost or unrecovered cost of the annuity at the annuity starting date. 2012 tax forms 1040 ez See Example 3 under Computation Under General Rule for an illustration of the adjustment to the cost of the contract. 2012 tax forms 1040 ez Net cost. 2012 tax forms 1040 ez   Your total cost plus certain adjustments and minus other amounts already recovered before the annuity starting date is your net cost. 2012 tax forms 1040 ez This is the unrecovered investment in the contract as of the annuity starting date. 2012 tax forms 1040 ez If your annuity starting date is after 1986, this is the maximum amount that you may recover tax free under the contract. 2012 tax forms 1040 ez Refund feature. 2012 tax forms 1040 ez   Adjustment for the value of the refund feature is only applicable when you report your pension or annuity under the General Rule. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez Zero value of refund feature. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez   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). 2012 tax forms 1040 ez   If you do not meet these requirements, you will have to figure the value of the refund feature, as explained in the following discussion. 2012 tax forms 1040 ez Examples. 2012 tax forms 1040 ez The first example shows how to figure the value of the refund feature when there is only one beneficiary. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez In both examples, the taxpayer elects to use Tables V through VIII. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Example 1. 2012 tax forms 1040 ez At age 65, Barbara bought for $21,053 an annuity with a refund feature. 2012 tax forms 1040 ez She will get $100 a month for life. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez In this case, the contract cost and the total guaranteed return are the same ($21,053). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Example 2. 2012 tax forms 1040 ez John died while still employed. 2012 tax forms 1040 ez His widow, Eleanor, age 48, receives $171 a month for the rest of her life. 2012 tax forms 1040 ez John's son, Elmer, age 9, receives $50 a month until he reaches age 18. 2012 tax forms 1040 ez John's contributions to the retirement fund totaled $7,559. 2012 tax forms 1040 ez 45, with interest on those contributions of $1,602. 2012 tax forms 1040 ez 53. 2012 tax forms 1040 ez The guarantee or total refund feature of the contract is $9,161. 2012 tax forms 1040 ez 98 ($7,559. 2012 tax forms 1040 ez 45 plus $1,602. 2012 tax forms 1040 ez 53). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 9 $71,614. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 0 5,400. 2012 tax forms 1040 ez 00   3) Total expected return   $77,014. 2012 tax forms 1040 ez 80 B) Adjustment for refund feature:       1) Contributions (net cost) $7,559. 2012 tax forms 1040 ez 45   2) Guaranteed amount (contributions of $7,559. 2012 tax forms 1040 ez 45 plus interest of $1,602. 2012 tax forms 1040 ez 53) $9,161. 2012 tax forms 1040 ez 98   3) Minus: Expected return under child's (temporary life) annuity (A(2)) 5,400. 2012 tax forms 1040 ez 00   4) Net guaranteed amount $3,761. 2012 tax forms 1040 ez 98   5) Multiple from Table VII (nearest age 48 for 2 years duration (recovery of $3,761. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez See the discussion of expected return, later in this publication. 2012 tax forms 1040 ez Free IRS help. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez Expected Return Your expected return is the total amount you and other eligible annuitants can expect to receive under the contract. 2012 tax forms 1040 ez The following discussions explain how to figure the expected return with each type of annuity. 2012 tax forms 1040 ez A person's age, for purposes of figuring the expected return, is the age at the birthday nearest to the annuity starting date. 2012 tax forms 1040 ez Fixed period annuity. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez It is the total amount you will get beginning at the annuity starting date. 2012 tax forms 1040 ez You will receive specific periodic payments for a definite period of time, such as a fixed number of months (but not less than 13). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Single life annuity. 2012 tax forms 1040 ez   If you are to get annuity payments for the rest of your life, find your expected return as follows. 2012 tax forms 1040 ez You must multiply the amount of the annual payment by a multiple based on your life expectancy as of the annuity starting date. 2012 tax forms 1040 ez These multiples are set out in actuarial Tables I and V near the end of this publication (see How To Use Actuarial Tables , later). 2012 tax forms 1040 ez   You may need to adjust these multiples if the payments are made quarterly, semiannually, or annually. 2012 tax forms 1040 ez See Adjustments to Tables I, II, V, VI, and VIA following Table I. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez Henry bought an annuity contract that will give him an annuity of $500 a month for his life. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 2 multiple by +. 2012 tax forms 1040 ez 1. 2012 tax forms 1040 ez His expected return would then be $115,800 ($6,000 × 19. 2012 tax forms 1040 ez 3). 2012 tax forms 1040 ez Annuity for shorter of life or specified period. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez To figure your expected return, multiply the amount of your annual payment by a multiple in Table IV or VIII for temporary life annuities. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez Harriet purchased an annuity this year that will pay her $200 each month for five years or until she dies, whichever period is shorter. 2012 tax forms 1040 ez She was age 65 at her birthday nearest the annuity starting date. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 9 Expected return $11,760 She uses Table VIII (not Table IV) because all her contributions were made after June 30, 1986. 2012 tax forms 1040 ez See Special Elections, later. 2012 tax forms 1040 ez Joint and survivor annuities. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez To figure the expected return, multiply the annual payment by a multiple in Table II or VI based on your joint life expectancies. 2012 tax forms 1040 ez If your payments are made quarterly, semiannually, or annually, you may need to adjust these multiples. 2012 tax forms 1040 ez See Adjustments to Tables I, II, V, VI, and VIA following Table I near the end of this publication. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez At John's annuity starting date, his age at his nearest birthday is 70 and his wife's at her nearest birthday is 67. 2012 tax forms 1040 ez The expected return is figured as follows: Annual payment ($500 × 12 months) $6,000 Multiple shown in Table VI, ages 67 and 70 × 22. 2012 tax forms 1040 ez 0 Expected return $132,000 Different payments to survivor. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez Example 1. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 0 Multiple for Gerald, age 70 (from Table V)   16. 2012 tax forms 1040 ez 0 Difference: Multiple applicable to Mary   6. 2012 tax forms 1040 ez 0 Gerald's annual payment ($500 × 12) $6,000   Gerald's multiple 16. 2012 tax forms 1040 ez 0   Gerald's expected return   $96,000 Mary's annual payment ($350 × 12) $4,200   Mary's multiple 6. 2012 tax forms 1040 ez 0   Mary's expected return   25,200 Total expected return under the contract   $121,200 Example 2. 2012 tax forms 1040 ez Your husband died while still employed. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Your daughters, Marie and Jean, are each entitled to immediate temporary life annuities of $150 a month until they reach age 18. 2012 tax forms 1040 ez You were 50 years old at the annuity starting date. 2012 tax forms 1040 ez Marie was 16 and Jean was 14. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 1 × $4,800 annual payment) $158,880 Marie, age 16 for 2 years duration (multiple from Table VIII—2. 2012 tax forms 1040 ez 0 × $1,800 annual payment) 3,600 Jean, age 14 for 4 years duration (multiple from Table VIII—4. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Computation Under the General Rule Note. 2012 tax forms 1040 ez Variable annuities use a different computation for determining the exclusion amounts. 2012 tax forms 1040 ez See Variable annuities later. 2012 tax forms 1040 ez Under the General Rule, you figure the taxable part of your annuity by using the following steps: Step 1. 2012 tax forms 1040 ez   Figure the amount of your investment in the contract, including any adjustments for the refund feature and the death benefit exclusion, if applicable. 2012 tax forms 1040 ez See Death benefit exclusion , earlier. 2012 tax forms 1040 ez Step 2. 2012 tax forms 1040 ez   Figure your expected return. 2012 tax forms 1040 ez Step 3. 2012 tax forms 1040 ez   Divide Step 1 by Step 2 and round to three decimal places. 2012 tax forms 1040 ez This will give you the exclusion percentage. 2012 tax forms 1040 ez Step 4. 2012 tax forms 1040 ez   Multiply the exclusion percentage by the first regular periodic payment. 2012 tax forms 1040 ez The result is the tax-free part of each pension or annuity payment. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez   Each annuitant applies the same exclusion percentage to his or her initial payment called for in the contract. 2012 tax forms 1040 ez Step 5. 2012 tax forms 1040 ez   Multiply the tax-free part of each payment (step 4) by the number of payments received during the year. 2012 tax forms 1040 ez This will give you the tax-free part of the total payment for the year. 2012 tax forms 1040 ez    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. 2012 tax forms 1040 ez This fractional amount is multiplied by your exclusion percentage to get the tax-free part. 2012 tax forms 1040 ez Step 6. 2012 tax forms 1040 ez   Subtract the tax-free part from the total payment you received. 2012 tax forms 1040 ez The rest is the taxable part of your pension or annuity. 2012 tax forms 1040 ez Example 1. 2012 tax forms 1040 ez You purchased an annuity with an investment in the contract of $10,800. 2012 tax forms 1040 ez Under its terms, the annuity will pay you $100 a month for life. 2012 tax forms 1040 ez The multiple for your age (age 65) is 20. 2012 tax forms 1040 ez 0 as shown in Table V. 2012 tax forms 1040 ez Your expected return is $24,000 (20 × 12 × $100). 2012 tax forms 1040 ez Your cost of $10,800, divided by your expected return of $24,000, equals 45. 2012 tax forms 1040 ez 0%. 2012 tax forms 1040 ez This is the percentage you will not have to include in income. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez If you had received only six payments of $100 ($600) during the year, your exclusion would have been $270 (45% of $100 × 6 payments). 2012 tax forms 1040 ez Example 2. 2012 tax forms 1040 ez Gerald bought a joint and survivor annuity. 2012 tax forms 1040 ez Gerald's investment in the contract is $62,712 and the expected return is $121,200. 2012 tax forms 1040 ez The exclusion percentage is 51. 2012 tax forms 1040 ez 7% ($62,712 ÷ $121,200). 2012 tax forms 1040 ez Gerald will receive $500 a month ($6,000 a year). 2012 tax forms 1040 ez Each year, until his net cost is recovered, $3,102 (51. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez If Gerald dies, his wife will receive $350 a month ($4,200 a year). 2012 tax forms 1040 ez If Gerald had not recovered all of his net cost before his death, his wife will use the same exclusion percentage (51. 2012 tax forms 1040 ez 7%). 2012 tax forms 1040 ez Each year, until the entire net cost is recovered, his wife will receive $2,171. 2012 tax forms 1040 ez 40 (51. 2012 tax forms 1040 ez 7% of her payments received of $4,200) tax free. 2012 tax forms 1040 ez She will include $2,028. 2012 tax forms 1040 ez 60 ($4,200 − $2,171. 2012 tax forms 1040 ez 40) in her income tax return. 2012 tax forms 1040 ez Example 3. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Your two daughters each receive annual annuities of $1,800 until they reach age 18. 2012 tax forms 1040 ez Your husband contributed $25,576 to the plan. 2012 tax forms 1040 ez You are eligible for the $5,000 death benefit exclusion because your husband died before August 21, 1996. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez The exclusion percentage of 18. 2012 tax forms 1040 ez 0% ($30,576 ÷ $169,680) applies to the annuity payments you and each of your daughters receive. 2012 tax forms 1040 ez Each full year $864 (18. 2012 tax forms 1040 ez 0% × $4,800) will be tax free to you, and you must include $3,936 in your income tax return. 2012 tax forms 1040 ez Each year, until age 18, $324 (18. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Part-year payments. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez   If you received a fractional payment, follow Step 5, discussed earlier. 2012 tax forms 1040 ez This gives you the tax-free part of your total payment. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez On September 28, Mary bought an annuity contract for $22,050 that will give her $125 a month for life, beginning October 30. 2012 tax forms 1040 ez The applicable multiple from Table V is 23. 2012 tax forms 1040 ez 3 (age 61). 2012 tax forms 1040 ez Her expected return is $34,950 ($125 × 12 × 23. 2012 tax forms 1040 ez 3). 2012 tax forms 1040 ez Mary's investment in the contract of $22,050, divided by her expected return of $34,950, equals 63. 2012 tax forms 1040 ez 1%. 2012 tax forms 1040 ez Each payment received will consist of 63. 2012 tax forms 1040 ez 1% return of cost and 36. 2012 tax forms 1040 ez 9% taxable income, until her net cost of the contract is fully recovered. 2012 tax forms 1040 ez During the first year, Mary received three payments of $125, or $375, of which $236. 2012 tax forms 1040 ez 63 (63. 2012 tax forms 1040 ez 1% × $375) is a return of cost. 2012 tax forms 1040 ez The remaining $138. 2012 tax forms 1040 ez 37 is included in income. 2012 tax forms 1040 ez Increase in annuity payments. 2012 tax forms 1040 ez   The tax-free amount remains the same as the amount figured at the annuity starting date, even if the payment increases. 2012 tax forms 1040 ez All increases in the installment payments are fully taxable. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez 72-5(a)(5) of the regulations. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez Joe's wife died while she was still employed and, as her beneficiary, he began receiving an annuity of $147 per month. 2012 tax forms 1040 ez In figuring the taxable part, Joe elects to use Tables V through VIII. 2012 tax forms 1040 ez The cost of the contract was $7,938, consisting of the sum of his wife's net contributions, adjusted for any refund feature. 2012 tax forms 1040 ez His expected return as of the annuity starting date is $35,280 (age 65, multiple of 20. 2012 tax forms 1040 ez 0 × $1,764 annual payment). 2012 tax forms 1040 ez The exclusion percentage is $7,938 ÷ $35,280, or 22. 2012 tax forms 1040 ez 5%. 2012 tax forms 1040 ez During the year he received 11 monthly payments of $147, or $1,617. 2012 tax forms 1040 ez Of this amount, 22. 2012 tax forms 1040 ez 5% × $147 × 11 ($363. 2012 tax forms 1040 ez 83) is tax free as a return of cost and the balance of $1,253. 2012 tax forms 1040 ez 17 is taxable. 2012 tax forms 1040 ez Later, because of a cost-of-living increase, his annuity payment was increased to $166 per month, or $1,992 a year (12 × $166). 2012 tax forms 1040 ez The tax-free part is still only 22. 2012 tax forms 1040 ez 5% of the annuity payments as of the annuity starting date (22. 2012 tax forms 1040 ez 5% × $147 × 12 = $396. 2012 tax forms 1040 ez 90 for a full year). 2012 tax forms 1040 ez The increase of $228 ($1,992 − $1,764 (12 × $147)) is fully taxable. 2012 tax forms 1040 ez Variable annuities. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez If the annuity is for life, you determine the total number of payments by using a multiple from the appropriate actuarial table. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez Frank purchased a variable annuity at age 65. 2012 tax forms 1040 ez The total cost of the contract was $12,000. 2012 tax forms 1040 ez The annuity starting date is January 1 of the year of purchase. 2012 tax forms 1040 ez His annuity will be paid, starting July 1, in variable annual installments for his life. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez The result is added to the previously figured periodic tax-free part. 2012 tax forms 1040 ez The sum is the amount of each future payment that will be tax free. 2012 tax forms 1040 ez Example. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Frank does not pay tax on the $500 (second year) payment because $600 of each annual pension payment is tax free. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 00 Amount received in second year 500. 2012 tax forms 1040 ez 00 Difference $100. 2012 tax forms 1040 ez 00 Number of remaining payments after the first 2 payments (age 67, from Table V) 18. 2012 tax forms 1040 ez 4 Amount to be added to previously determined annual tax-free part ($100 ÷ 18. 2012 tax forms 1040 ez 4) $5. 2012 tax forms 1040 ez 43 Revised annual tax-free part for third and later years ($600 + $5. 2012 tax forms 1040 ez 43) $605. 2012 tax forms 1040 ez 43 Amount taxable in third year ($1,200 − $605. 2012 tax forms 1040 ez 43) $594. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 72–4(d)(3) of the Income Tax Regulations. 2012 tax forms 1040 ez The statement must also show the following information: The annuity starting date and your age on that date. 2012 tax forms 1040 ez The first day of the first period for which you received an annuity payment in the current year. 2012 tax forms 1040 ez Your investment in the contract as originally figured. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Exclusion Limits Your annuity starting date determines the total amount of annuity income that you can exclude from income over the years. 2012 tax forms 1040 ez Exclusion limited to net cost. 2012 tax forms 1040 ez   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). 2012 tax forms 1040 ez This is the unrecovered investment in the contract as of the annuity starting date. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez This deduction is not subject to the 2%-of-adjusted-gross-income limit. 2012 tax forms 1040 ez Example 1. 2012 tax forms 1040 ez Your annuity starting date is after 1986. 2012 tax forms 1040 ez Your total cost is $12,500, and your net cost is $10,000, taking into account certain adjustments. 2012 tax forms 1040 ez There is no refund feature. 2012 tax forms 1040 ez Your monthly annuity payment is $833. 2012 tax forms 1040 ez 33. 2012 tax forms 1040 ez Your exclusion ratio is 12% and you exclude $100 a month. 2012 tax forms 1040 ez Your exclusion ends after 100 months, when you have excluded your net cost of $10,000. 2012 tax forms 1040 ez Thereafter, your annuity payments are fully taxable. 2012 tax forms 1040 ez Example 2. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez The adjustment for the refund feature is $1,000, so the investment in the contract is $9,000. 2012 tax forms 1040 ez The exclusion ratio is 10. 2012 tax forms 1040 ez 8%, and your monthly exclusion is $90. 2012 tax forms 1040 ez After 5 years (60 months), you have recovered tax free only $5,400 ($90 x 60). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Your unrecovered investment is determined without regard to the refund feature adjustment, discussed earlier, under Adjustments. 2012 tax forms 1040 ez Exclusion not limited to net cost. 2012 tax forms 1040 ez   If your annuity starting date was before 1987, you could continue to take your monthly exclusion for as long as you receive your annuity. 2012 tax forms 1040 ez If you choose a joint and survivor annuity, your survivor continues to take the survivor's exclusion figured as of the annuity starting date. 2012 tax forms 1040 ez The total exclusion may be more than your investment in the contract. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez These tables correspond to the old Tables I through IV. 2012 tax forms 1040 ez In general, Tables V through VIII must be used if you made contributions to the retirement plan after June 30, 1986. 2012 tax forms 1040 ez If you made no contributions to the plan after June 30, 1986, generally you must use only Tables I through IV. 2012 tax forms 1040 ez 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). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Contributions made both before July 1986 and after June 1986. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez (See the examples below. 2012 tax forms 1040 ez )    Making the election. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 72–6 of the Income Tax Regulations. 2012 tax forms 1040 ez ”   The statement must also include your name, address, social security number, and the amount of the pre-July 1986 investment in the contract. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez    Advantages of election. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez    If you intend to make this election, save your records that substantiate your pre-July 1986 and post-June 1986 contributions. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez Example 1. 2012 tax forms 1040 ez Bill, who is single, contributed $42,000 to the retirement plan and will receive an annual annuity of $24,000 for life. 2012 tax forms 1040 ez Payment of the $42,000 contribution is guaranteed under a refund feature. 2012 tax forms 1040 ez Bill is 55 years old as of the annuity starting date. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez       Pre- July 1986   Post- June 1986 A. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Expected return         1) Annual annuity receivable $24,000   $24,000   2) Multiples from Tables I and V 21. 2012 tax forms 1040 ez 7   28. 2012 tax forms 1040 ez 6   3) Expected return, C(1) × C(2) $520,800   $686,400 D. 2012 tax forms 1040 ez Tax-free part of annuity         1) Exclusion ratio as decimal,  B(3) ÷ C(3) . 2012 tax forms 1040 ez 079   . 2012 tax forms 1040 ez 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). 2012 tax forms 1040 ez The taxable part of his annuity is $22,080 ($24,000 minus $1,920). 2012 tax forms 1040 ez 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). 2012 tax forms 1040 ez Example 2. 2012 tax forms 1040 ez Al is age 62 at his nearest birthday to the annuity starting date. 2012 tax forms 1040 ez Al's wife is age 60 at her nearest birthday to the annuity starting date. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez The pre-July 1986 investment in the contract is $53,100 and the post-June 1986 investment in the contract is $7,000. 2012 tax forms 1040 ez Al makes the election described in Example 1 . 2012 tax forms 1040 ez For purposes of this example, assume the refund feature adjustment is zero. 2012 tax forms 1040 ez If an adjustment is required, IRS will figure the amount. 2012 tax forms 1040 ez See Requesting a Ruling on Taxation of Annuity near the end of this publication. 2012 tax forms 1040 ez       Pre-  July 1986   Post-  June 1986 A. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Expected return         1) Multiple for both annuitants from Tables II and VI 25. 2012 tax forms 1040 ez 4   28. 2012 tax forms 1040 ez 8   2) Multiple for first annuitant from Tables I and V 16. 2012 tax forms 1040 ez 9   22. 2012 tax forms 1040 ez 5   3) Multiple applicable to surviving annuitant, subtract C(2) from C(1) 8. 2012 tax forms 1040 ez 5   6. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Tax-free part of annuity         1) Exclusion ratio as a decimal, B(3) ÷ C(8) . 2012 tax forms 1040 ez 209   . 2012 tax forms 1040 ez 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). 2012 tax forms 1040 ez The taxable part of his annuity is $9,216 ($12,000 − $2,784). 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez After Al's death, his widow will apply the same exclusion percentages (20. 2012 tax forms 1040 ez 9% and 2. 2012 tax forms 1040 ez 3%) to her annual annuity of $6,000 to figure the tax-free part of her annuity. 2012 tax forms 1040 ez Annuity received after June 30, 1986. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez Once made, you cannot revoke the election, which will apply to all payments during the year and in any later year. 2012 tax forms 1040 ez    Make the election by attaching the following statement to your income tax return. 2012 tax forms 1040 ez    “I elect, under section 1. 2012 tax forms 1040 ez 72–9 of the Income Tax Regulations, to treat my entire cost of the contract as a post-June 1986 cost of the plan. 2012 tax forms 1040 ez ”   The statement must also include your name, address, and social security number. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez Disqualifying form of payment or settlement. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez See regulations section 1. 2012 tax forms 1040 ez 72–6(d)(3) for additional examples of disqualifying forms of payment or settlement. 2012 tax forms 1040 ez You can find the Income Tax Regulations in many libraries and at Internal Revenue Service Offices. 2012 tax forms 1040 ez Worksheets for Determining Taxable Annuity Worksheets I and II. 2012 tax forms 1040 ez   Worksheets I and II follow for determining your taxable annuity under Regulations Section 1. 2012 tax forms 1040 ez 72–6(d)(6) Election. 2012 tax forms 1040 ez Worksheet I For Determining Taxable Annuity Under Regulations Section 1. 2012 tax forms 1040 ez 72-6(d)(6) Election For Single Annuitant With No Survivor Annuity               Pre-July 1986   Post-June 1986 A. 2012 tax forms 1040 ez   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 2012 tax forms 1040 ez )             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. 2012 tax forms 1040 ez If not, the IRS will calculate the refund feature percentage. 2012 tax forms 1040 ez             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez     Worksheet II For Determining Taxable Annuity Under Regulations Section 1. 2012 tax forms 1040 ez 72-6(d)(6) Election For Joint and Survivor Annuity               Pre-July 1986   Post-June 1986 A. 2012 tax forms 1040 ez   Refund Feature Adjustment             1)   Net cost (total cost less returned premiums, dividends, etc. 2012 tax forms 1040 ez )             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. 2012 tax forms 1040 ez If not, the IRS will calculate the refund feature percentage. 2012 tax forms 1040 ez             6)   Refund feature adjustment:                   A(5) times lesser of A(1) or A(3)                             B. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez   Expected Return             1)   Multiples for both annuitants, Tables II and VI             2)   Multiple for retiree. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez   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. 2012 tax forms 1040 ez   Actuarial Tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial Tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial Tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click 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Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text 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tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez Actuarial tables Please click here for the text description of the image. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez If you make this request, you are asking for a ruling. 2012 tax forms 1040 ez User fee. 2012 tax forms 1040 ez   Under the law in effect at the time this publication went to print, the IRS must charge a user fee for all ruling requests. 2012 tax forms 1040 ez You should call the IRS for the proper fee. 2012 tax forms 1040 ez A request solely for the value of the refund feature is not treated as a ruling request and requires no fee. 2012 tax forms 1040 ez Send your request to:     Internal Revenue Service  Attention: EP Letter Rulings P. 2012 tax forms 1040 ez O. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez When to make the request. 2012 tax forms 1040 ez   Please note that requests sent between February 1 and April 15 may experience some delay. 2012 tax forms 1040 ez We process requests in the order received, and we will reply to your request as soon as we can process it. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez S. 2012 tax forms 1040 ez Individual Income Tax Return, to get an extension of time to file. 2012 tax forms 1040 ez Information you must furnish. 2012 tax forms 1040 ez   You must furnish the information listed below so the IRS can comply with your request. 2012 tax forms 1040 ez Failure to furnish the information will result in a delay in processing your request. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Copies of any documents showing distributions, annuity rates, and annuity options available to you. 2012 tax forms 1040 ez A copy of any Form 1099–R you received since your annuity began. 2012 tax forms 1040 ez A statement indicating whether you have filed your return for the year for which you are making the request. 2012 tax forms 1040 ez If you have requested an extension of time to file that return, please indicate the extension date. 2012 tax forms 1040 ez Your daytime phone number. 2012 tax forms 1040 ez Your current mailing address. 2012 tax forms 1040 ez A power of attorney if someone other than you, an attorney, a certified public accountant, or an enrolled agent is signing this request. 2012 tax forms 1040 ez Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose. 2012 tax forms 1040 ez A completed Tax Information Sheet (or facsimile) shown on the next page. 2012 tax forms 1040 ez Sign and date the Disclosure and Perjury Statement (or facsimile) at the end of the tax information sheet. 2012 tax forms 1040 ez This statement must be signed by the retiree or the survivor annuitant. 2012 tax forms 1040 ez It cannot be signed by a representative. 2012 tax forms 1040 ez Tax Information Sheet Please click here for the text description of the image. 2012 tax forms 1040 ez Tax Information Sheet Please click here for the text description of the image. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Free help with your tax return. 2012 tax forms 1040 ez   You can get free help preparing your return nationwide from IRS-certified volunteers. 2012 tax forms 1040 ez The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 2012 tax forms 1040 ez The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 2012 tax forms 1040 ez To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 2012 tax forms 1040 ez gov, download the IRS2Go app, or call 1-800-906-9887. 2012 tax forms 1040 ez   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2012 tax forms 1040 ez To find the nearest AARP Tax-Aide site, visit AARP's website at www. 2012 tax forms 1040 ez aarp. 2012 tax forms 1040 ez org/money/taxaide or call 1-888-227-7669. 2012 tax forms 1040 ez For more information on these programs, go to IRS. 2012 tax forms 1040 ez gov and enter “VITA” in the search box. 2012 tax forms 1040 ez Internet. 2012 tax forms 1040 ez    IRS. 2012 tax forms 1040 ez gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 2012 tax forms 1040 ez Download the free IRS2Go app from the iTunes app store or from Google Play. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Check the status of your 2013 refund with the Where's My Refund? application on IRS. 2012 tax forms 1040 ez gov or download the IRS2Go app and select the Refund Status option. 2012 tax forms 1040 ez The IRS issues more than 9 out of 10 refunds in less than 21 days. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2012 tax forms 1040 ez The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2012 tax forms 1040 ez Use the Interactive Tax Assistant (ITA) to research your tax questions. 2012 tax forms 1040 ez No need to wait on the phone or stand in line. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez When you reach the response screen, you can print the entire interview and the final response for your records. 2012 tax forms 1040 ez New subject areas are added on a regular basis. 2012 tax forms 1040 ez  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 2012 tax forms 1040 ez gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 2012 tax forms 1040 ez You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 2012 tax forms 1040 ez The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez You can also ask the IRS to mail a return or an account transcript to you. 2012 tax forms 1040 ez Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 2012 tax forms 1040 ez gov or by calling 1-800-908-9946. 2012 tax forms 1040 ez Tax return and tax account transcripts are generally available for the current year and the past three years. 2012 tax forms 1040 ez Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 2012 tax forms 1040 ez Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Check the status of your amended return using Where's My Amended Return? Go to IRS. 2012 tax forms 1040 ez gov and enter Where's My Amended Return? in the search box. 2012 tax forms 1040 ez You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2012 tax forms 1040 ez It can take up to 3 weeks from the date you mailed it to show up in our system. 2012 tax forms 1040 ez Make a payment using one of several safe and convenient electronic payment options available on IRS. 2012 tax forms 1040 ez gov. 2012 tax forms 1040 ez Select the Payment tab on the front page of IRS. 2012 tax forms 1040 ez gov for more information. 2012 tax forms 1040 ez Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 2012 tax forms 1040 ez Figure your income tax withholding with the IRS Withholding Calculator on IRS. 2012 tax forms 1040 ez gov. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 2012 tax forms 1040 ez gov. 2012 tax forms 1040 ez Request an Electronic Filing PIN by going to IRS. 2012 tax forms 1040 ez gov and entering Electronic Filing PIN in the search box. 2012 tax forms 1040 ez Download forms, instructions and publications, including accessible versions for people with disabilities. 2012 tax forms 1040 ez Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 2012 tax forms 1040 ez gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 2012 tax forms 1040 ez An employee can answer questions about your tax account or help you set up a payment plan. 2012 tax forms 1040 ez Before you visit, check the Office Locator on IRS. 2012 tax forms 1040 ez gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 2012 tax forms 1040 ez If you have a special need, such as a disability, you can request an appointment. 2012 tax forms 1040 ez Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 2012 tax forms 1040 ez Apply for an Employer Identification Number (EIN). 2012 tax forms 1040 ez Go to IRS. 2012 tax forms 1040 ez gov and enter Apply for an EIN in the search box. 2012 tax forms 1040 ez Read the Internal Revenue Code, regulations, or other official guidance. 2012 tax forms 1040 ez Read Internal Revenue Bulletins. 2012 tax forms 1040 ez Sign up to receive local and national tax news and more by email. 2012 tax forms 1040 ez Just click on “subscriptions” above the search box on IRS. 2012 tax forms 1040 ez gov and choose from a variety of options. 2012 tax forms 1040 ez    Phone. 2012 tax forms 1040 ez You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 2012 tax forms 1040 ez Download the free IRS2Go app from the iTunes app store or from Google Play. 2012 tax forms 1040 ez Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 2012 tax forms 1040 ez gov, or download the IRS2Go app. 2012 tax forms 1040 ez 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. 2012 tax forms 1040 ez The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2012 tax forms 1040 ez Mos