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Hr block free efile Publication 1542 - Introductory Material Table of Contents What's New IntroductionOrdering forms and publications. Hr block free efile Tax questions. Hr block free efile What's New Future developments. Hr block free efile  The IRS has created a page on IRS. Hr block free efile gov for information about Publication 1542, at www. Hr block free efile irs. Hr block free efile gov/pub1542. Hr block free efile Information about any future developments affecting Publication 1542 (such as legislation enacted after we release it) will be posted on that page. Hr block free efile Introduction This publication is for employers who pay a per diem allowance to employees for business travel away from home within the continental United States (CONUS) (the 48 contiguous states), on or after October 1, 2010, and before January 1, 2011. Hr block free efile It gives the maximum per diem rate you can use without treating part of the per diem allowance as wages for tax purposes. Hr block free efile For a detailed discussion on the tax treatment of a per diem allowance, see chapter 11 of Publication 535, Business Expenses, or Revenue Procedure 2011-47, 2011-42 I. Hr block free efile R. Hr block free efile B. Hr block free efile 520, which can be found on the Internet at www. Hr block free efile irs. Hr block free efile gov/irb/2011-42_IRB/ar12. Hr block free efile html. Hr block free efile Per diem rates on the Internet. Hr block free efile   You will find links to per diem rates at www. Hr block free efile gsa. Hr block free efile gov/perdiem, including links to: CONUS per diem rates; Per diem rates for areas outside the continental United States (OCONUS), such as Alaska, Hawaii, Puerto Rico, and U. Hr block free efile S. Hr block free efile possessions; and Foreign per diem rates. Hr block free efile Publication 1542 revisions. Hr block free efile   Publication 1542 is available only on the Internet at IRS. Hr block free efile gov. Hr block free efile Print copies can no longer be ordered. Hr block free efile   During the year, as changes to the federal per diem rates (updates) are announced by the General Services Administration (GSA), we will incorporate the changes into Publication 1542. Hr block free efile An article on IRS. Hr block free efile gov will alert you to which locations have updated rates. Hr block free efile To reach these articles, go to www. Hr block free efile irs. Hr block free efile gov/formspubs and click on “Changes to Current Tax Products,” under Important Changes. Hr block free efile You will find the new rates in Table 4. Hr block free efile   We will also incorporate mid-year changes to the high-low rates into Publication 1542. Hr block free efile You will be alerted to these changes by a similar article on IRS. Hr block free efile gov and can find the changes in Table 2 of the revised publication. Hr block free efile   The annual changes, both federal per diem and high-low rates, will be incorporated into the publication as soon as possible after being announced by GSA and the IRS. Hr block free efile The annual issue of the publication should be available each year in mid- to late-October. Hr block free efile Comments and suggestions. Hr block free efile   We welcome your comments about this publication and your suggestions for future editions. Hr block free efile   You can write to us at the following address: Internal Revenue Service Individual Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. Hr block free efile NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Hr block free efile Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Hr block free efile   You can email us at taxforms@irs. Hr block free efile gov. Hr block free efile Please put “Publications Comment” on the subject line. Hr block free efile You can also send us comments from www. Hr block free efile irs. Hr block free efile gov/formspubs/, select “Comment on Tax Forms and Publications” under “Information about. Hr block free efile ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Hr block free efile Ordering forms and publications. Hr block free efile   Visit www. Hr block free efile irs. Hr block free efile gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Hr block free efile Internal Revenue Service 1201 N. Hr block free efile Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Hr block free efile   If you have a tax question, check the information available on IRS. Hr block free efile gov or call 1-800-829-1040. Hr block free efile We cannot answer tax questions sent to either of the above addresses. Hr block free efile Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Massachusetts Office of the Attorney General

Website: Massachusetts Office of the Attorney General

Address: Massachusetts Office of the Attorney General
Public Inquiry and Assistance Center
One Ashburton Pl., 18th Floor
Boston, MA 02108-1518

Phone Number: 617-727-8400 (Consumer Hotline)

TTY: 617-727-4765

Office of Consumer Affairs and Business Regulation

Website: Office of Consumer Affairs and Business Regulation

Address: Office of Consumer Affairs and Business Regulation
10 Park Plaza, Suite 5170
Boston, MA 02116

Phone Number: 617-973-8700

Toll-free: 1-888-283-3757 (MA, Consumer Hotline)

TTY: 1-800-720-3480

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Regional Consumer Protection Offices

Office of the Attorney General- Central Massachusetts Region

Website: Office of the Attorney General- Central Massachusetts Region

Address: Office of the Attorney General- Central Massachusetts Region
Public Inquiry and Assistance Center
10 Mechanic St.
Suite 301
Worcester, MA 01608

Phone Number: 508-792-7600

TTY: 617-727-4765

Office of the Attorney General- Southern Massachusetts Region

Website: Office of the Attorney General- Southern Massachusetts Region

Address: Office of the Attorney General- Southern Massachusetts Region
Public Inquiry and Assistance Center
105 William St., 1st Floor
New Bedford, MA 02740-6257

Phone Number: 508-990-9700 617-727-8400 (Hotline)

TTY: 617-727-4765

Office of the Attorney General- Western Massachusetts Region

Website: Office of the Attorney General- Western Massachusetts Region

Address: Office of the Attorney General- Western Massachusetts Region
Consumer Protection Division
1350 Main St., 4th Floor
Springfield, MA 01103-1629

Phone Number: 413-784-1240 617-727-8400 (Hotline)

TTY: 617-727-4765

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County Consumer Protection Offices

Springfield Mayors Office of Consumer Information

Website: Springfield Mayors Office of Consumer Information

Address: Springfield Mayors Office of Consumer Information
City Hall, Room 315
36 Court St.
Springfield, MA 01103

Phone Number: 413-787-6437

TTY: 413-787-6154

Norfolk District Attorney's Office

Website: Norfolk District Attorney's Office

Address: Norfolk District Attorney's Office
Consumer Protection Division
45 Shawmut Rd.
Canton, MA 02021

Phone Number: 781-830-4800 ext. 279

TTY: 617-727-0434

Northwestern District Attorneys Office - Franklin County

Website: Northwestern District Attorneys Office - Franklin County

Address: Northwestern District Attorneys Office - Franklin County
Consumer Protection Unit
13 Conway St.
Greenfield, MA 01301

Phone Number: 413-774-3186

Northwestern District Attorneys Office - Hampshire County

Website: Northwestern District Attorneys Office - Hampshire County

Address: Northwestern District Attorneys Office - Hampshire County
Consumer Protection Division
One Gleason Plaza
Northampton, MA 01060

Phone Number: 413-586-9225

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City Consumer Protection Offices

Boston Consumer Affairs and Licensing

Website: Boston Consumer Affairs and Licensing

Address: Boston Consumer Affairs and Licensing
One City Hall Square, Room 817
Boston, MA 02201-2039

Phone Number: 617-635-3834

Cambridge Consumers Council

Website: Cambridge Consumers Council

Address: Cambridge Consumers Council
831 Massachusetts Ave., 1st Floor
Cambridge, MA 02139

Phone Number: 617-349-6150

TTY: 617-349-6112

Newton-Brookline Consumer Office

Website: Newton-Brookline Consumer Office

Address: Newton-Brookline Consumer Office
Newton City Hall
1000 Commonwealth Ave.
Newton Centre, MA 02459

Phone Number: 617-796-1292

TTY: 617-796-1089

Revere Consumer Affairs Office

Website: Revere Consumer Affairs Office

Address: Revere Consumer Affairs Office
281 Broadway
Revere, MA 02151

Phone Number: 781-286-8114

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Office of Consumer Affairs and Business Regulation

Website: Office of Consumer Affairs and Business Regulation

Address: Office of Consumer Affairs and Business Regulation
Division of Banks
Consumer Assistance Unit

1000 Washington St., 10th Floor
Boston, MA 02118-6400

Phone Number: 617-956-1500

Toll-free: 1-800-495-2265 (MA)

TTY: 617-956-1577

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Division of Insurance

Website: Division of Insurance

Address: Division of Insurance
Consumer Services Section
1000 Washington St., Suite 810
Boston, MA 02118-6200

Phone Number: 617-521-7794

Toll-free: 1-877-563-4467 (MA)

TTY: 617-521-7490

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Office of the Secretary of the Commonwealth

Website: Office of the Secretary of the Commonwealth

Address: Office of the Secretary of the Commonwealth
Securities Division
One Ashburton Pl., 17th Floor
McCormack Building
Boston, MA 02108

Phone Number: 617-727-3548

Toll-free: 1-800-269-5428 (MA)

TTY: 617-878-3889

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Department of Public Utilities

Website: Department of Public Utilities

Address: Department of Public Utilities
Consumer Division
One South Station, Suite 2
Boston, MA 02110

Phone Number: 617-737-2836

Toll-free: 1-877-886-5066

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The Hr Block Free Efile

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