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Free File H&r Block

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

There are many types of credit cards with various features, but there is no one best credit card. The card you use depends entirely on how you plan to use it. Are you going to use it for everyday purchases or larger purchases? Do you plan to pay your balance off each month?When you apply for a credit card, consider:

  • The Annual Percentage Rate (APR). If the interest rate is variable, how is it determined and when can it change?
  • Periodic rate. This is the interest rate used to determine the finance charge on your balance each billing period.
  • Annual fee. While some cards have no annual fee, others expect you to pay an amount each year for being a cardholder.
  • Rewards programs. Can you earn points for flights, hotel stays, and gift certificates to your favorite retailers? Use online tools to find the card that offers the best rewards for you.
  • Grace period. This is the number of days you have to pay your bill before finance charges start. Without this period, you may have to pay interest from the date you use your card or when the purchase is posted to your account.
  • Finance charges. Most lenders calculate finance charges using an average daily account balance, which is the average of what you owed each day in the billing cycle. Look for offers that use an adjusted balance, which subtracts your monthly payment from your beginning balance. This method usually has the lowest finance charges. Stay away from offers that use the previous balance in calculating what you owe; this method has the highest finance charge. Also don't forget to check if there is a minimum finance charge.
  • Swipe fees. Some credit card companies may allow individual retailers to set and charge a fee when you swipe your credit card.
  • Other fees. Ask about fees when you get a cash advance, make a late payment, or go over your credit limit. Some credit card companies also charge a monthly fee. Be careful: sometimes companies may also try to upsell by offering other services such as credit protection, insurance, or debt coverage. The Federal Reserve has more information about credit card fees.

The Fair Credit and Charge Card Disclosure Act require credit and charge card issuers to include this information on credit applications. The Federal Trade Commission (FTC) offers a wide range of free publications on credit and consumer rights. The Federal Reserve Board provides a free brochure on choosing a credit card and a guide to credit protection laws.

Lost and Stolen Credit Cards

Immediately call the card issuer when you suspect a credit or charge card has been lost or stolen. Once you report the loss or theft of a card, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.

By federal law, once you report the loss or theft of a card, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.

The Free File H&r Block

Free file h&r block Part Three -   Ganancias y Pérdidas Los cuatro capítulos de esta sección abordan las ganancias y pérdidas provenientes de inversiones. Free file h&r block Explican también cómo calcular la base de una propiedad. Free file h&r block Una ganancia proveniente de la venta o del canje de acciones, bonos u otra propiedad de inversión puede estar sujeta a impuestos o al menos parcialmente exenta de impuestos. Free file h&r block Una pérdida puede ser o no ser deducible. Free file h&r block Además, estos capítulos tratan sobre las ganancias provenientes de la venta de propiedad de uso personal, incluidas las reglas especiales que corresponden al vender su vivienda. Free file h&r block Las pérdidas por hecho fortuito y robo no relacionadas con los negocios se presentan en el capítulo 25 de la Parte Cinco. Free file h&r block Table of Contents 13. Free file h&r block   Base de BienesIntroduction Useful Items - You may want to see: Base de CostoBienes Raíces Base AjustadaAumentos a la Base Disminuciones a la Base Base Distinta al CostoBienes Recibidos por Servicios Intercambios Sujetos a Impuestos Conversiones Involuntarias Intercambios no Sujetos a Impuestos Bienes Traspasados de un Cónyuge Bienes Recibidos como Donación Bienes Heredados Bienes de Uso Personal Cambiados a Uso Comercial o de Alquiler Acciones y Bonos 14. Free file h&r block   Venta de BienesRecordatorio Introduction Useful Items - You may want to see: Ventas y CanjesQué es una Venta o Canje Cómo Calcular Pérdidas o Ganancias Canjes no Sujetos a Impuestos Traspasos entre Cónyuges Transacciones entre Partes Vinculadas Pérdidas y Ganancias de CapitalPérdidas o Ganancias Ordinarias o de Capital Bienes de Capital y Bienes que no Son de Capital Período de Tenencia Deudas Incobrables no Empresariales Ventas Ficticias Reinversiones de Ganancia de Valores Cotizados en Bolsa 15. Free file h&r block   Venta de su ViviendaRecordatorio Introduction Useful Items - You may want to see: Vivienda Principal Cómo Calcular las Pérdidas o Ganancias Precio de Venta Cantidad Recibida Base Ajustada Cantidad de Pérdidas o Ganancias Enajenaciones que no Sean Ventas Cómo Determinar la Base Cómo Excluir las GananciasExclusión Máxima Requisitos de Propietario y de Uso Exclusión Máxima Reducida Uso Comercial o Alquiler de Vivienda Cómo Declarar la VentaHipoteca financiada por el vendedor. Free file h&r block Información adicional. Free file h&r block Situaciones EspecialesExcepción para ventas a personas emparentadas o vinculadas. Free file h&r block Recuperación (Devolución) de un Subsidio Hipotecario Federal 16. Free file h&r block   Cómo Declarar Ganancias y PérdidasQué Hay de Nuevo Introduction Useful Items - You may want to see: Cómo Declarar Ganancias y Pérdidas de CapitalExcepción 1. Free file h&r block Excepción 2. Free file h&r block Presente el Formulario 1099-B o el Formulario 1099-S al IRS. Free file h&r block Pérdidas de Capital Tasas Impositivas sobre Ganancias de Capital Prev  Up  Next   Home   More Online Publications