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Military Onesource Tax

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Military Onesource Tax

Military onesource tax Index A Abandonments, Abandonments Annuities, Insurance Policies and Annuities Asset classification Capital, Capital Assets Noncapital, Noncapital Assets Assistance (see Tax help) Assumption of liabilities, Assumption of liabilities. Military onesource tax , Liabilities. Military onesource tax B Basis Adjusted, Adjusted basis. Military onesource tax Original, Basis. Military onesource tax Bonds, U. Military onesource tax S. Military onesource tax Treasury, U. Military onesource tax S. Military onesource tax Treasury Notes or Bonds Business, sold, Sale of a Business C Canceled Debt, Cancellation of debt. Military onesource tax Lease, Cancellation of a lease. Military onesource tax Real property sale, Canceling a sale of real property. Military onesource tax Capital assets defined, Capital Assets Capital gains and losses Figuring, Long and Short Term Holding period, Holding period. Military onesource tax Long term, Long and Short Term Short term, Long and Short Term Treatment of capital losses, Treatment of Capital Losses Casualties, Section 1231 transactions. Military onesource tax Charitable organization Bargain sale to, Bargain sales to charity. Military onesource tax , Bargain sale to charity. Military onesource tax Gift to, Gift to charitable organization. Military onesource tax Classes of assets, Classes of assets. Military onesource tax Coal, Coal and Iron Ore Coins, Precious Metals and Stones, Stamps, and Coins Comments, Comments and suggestions. Military onesource tax Commodities derivative financial instruments, Commodities derivative financial instrument. Military onesource tax Condemnations, Condemnations, Section 1231 transactions. Military onesource tax Conversion transactions, Conversion Transactions Copyrights, Copyright. Military onesource tax , Copyrights. Military onesource tax Covenant not to compete, Covenant not to compete. Military onesource tax D Debt cancellation, Cancellation of debt. Military onesource tax , Cancellation of debt. Military onesource tax Deferred exchange, Deferred Exchange Depreciable property Real, Depreciable real property. Military onesource tax Records, Depreciation Recapture Section 1245, Section 1245 property defined. Military onesource tax , Like-Kind Exchanges and Involuntary Conversions Section 1250, Section 1250 property defined. Military onesource tax Depreciation recapture Personal property, Section 1245 Property Real property, Section 1250 property defined. Military onesource tax E Easement, Easement. Military onesource tax Exchanges Deferred, Deferred Exchange Involuntary, Involuntary Conversions Like-kind, Like-Kind Exchanges, Like-Kind Exchanges and Involuntary Conversions Nontaxable, Nontaxable Exchanges Related persons, Related persons. Military onesource tax U. Military onesource tax S. Military onesource tax Treasury notes or bonds, U. Military onesource tax S. Military onesource tax Treasury Notes or Bonds F Fair market value, Fair market value. Military onesource tax Foreclosure, Foreclosures and Repossessions Form 1040 (Sch. Military onesource tax D), Schedule D and Form 8949 1099-A, Forms 1099-A and 1099-C. Military onesource tax , Forms 1099-A and 1099-C. Military onesource tax 1099-B, Form 1099-B. Military onesource tax 1099-C, Forms 1099-A and 1099-C. Military onesource tax , Forms 1099-A and 1099-C. Military onesource tax 1099-S, Form 1099-S. Military onesource tax 4797, Business property. Military onesource tax , Reporting the exchange. Military onesource tax , Form 4797 8594, Reporting requirement. Military onesource tax 8824, Reporting the exchange. Military onesource tax 8949, Forms to file. Military onesource tax , Personal-use property. Military onesource tax , Reporting the exchange. Military onesource tax , More information. Military onesource tax , Timber, Introduction, Form 1099-B. Military onesource tax , Personal-use property. Military onesource tax , Mark-to-market election. Military onesource tax Franchise, Franchise, Trademark, or Trade Name Free tax services, Free help with your tax return. Military onesource tax G Gains and losses Bargain sale, Bargain Sale Business property, Ordinary or Capital Gain or Loss for Business Property Defined, Gain or Loss From Sales and Exchanges Form 4797, Form 4797 Ordinary or capital, Ordinary or Capital Gain or Loss Property changed to business or rental use, Property Changed to Business or Rental Use Property used partly for rental, Property Used Partly for Business or Rental Reporting, Reporting Gains and Losses Gifts of property, Gifts, Gift. Military onesource tax Gold, Precious Metals and Stones, Stamps, and Coins H Hedging transactions, Hedging transaction. Military onesource tax Help (see Tax help) Holding period, Holding period. Military onesource tax Housing, low income, Low-income housing. Military onesource tax , Low-Income Housing With Two or More Elements I Indirect ownership of stock, Ownership of stock or partnership interests. Military onesource tax Information returns, Information Returns Inherited property, Inherited property. Military onesource tax Installment sales, Installment Sales, Installment sale. Military onesource tax Insurance policies, Insurance Policies and Annuities Intangible property, Dispositions of Intangible Property Involuntary conversion Defined, Involuntary Conversions Depreciable property, Like-Kind Exchanges and Involuntary Conversions Iron ore, Coal and Iron Ore L Land Release of restriction, Release of restriction on land. Military onesource tax Subdivision, Subdivision of Land Lease, cancellation of, Cancellation of a lease. Military onesource tax Liabilities, assumption, Liabilities. Military onesource tax Like-kind exchanges Deferred, Deferred Exchange Liabilities, assumed, Assumption of liabilities. Military onesource tax Like-class property, Like-Kind Property Like-kind property, Like-Kind Property Multiple parties, Multiple-party transactions. Military onesource tax Multiple property, Multiple Property Exchanges Partnership interests, Partnership Interests Qualifying property, Qualifying Property Related persons, Like-Kind Exchanges Between Related Persons Low-income housing, Low-income housing. Military onesource tax M Multiple property exchanges, Multiple Property Exchanges N Noncapital assets defined, Noncapital Assets Nontaxable exchanges Like-kind, Like-Kind Exchanges Other nontaxable exchanges, Other Nontaxable Exchanges Partially, Partially Nontaxable Exchanges Property exchanged for stock, Property Exchanged for Stock Notes, U. Military onesource tax S. Military onesource tax Treasury, U. Military onesource tax S. Military onesource tax Treasury Notes or Bonds O Ordinary or capital gain, Ordinary or Capital Gain or Loss P Partially nontaxable exchanges, Partially Nontaxable Exchanges Partnership Controlled, Controlled partnership transaction. Military onesource tax Related persons, Related persons. Military onesource tax , Controlled entity. Military onesource tax Sale or exchange of interest, Partnership Interests, Partnership interests. Military onesource tax , Partnership interests. Military onesource tax Patents, Patents Personal property Depreciable, Like-Kind Exchanges and Involuntary Conversions Gains and losses, Personal-use property. Military onesource tax Transfer at death, Transfers at Death Precious metals and stones, Precious Metals and Stones, Stamps, and Coins Property used partly for business or rental, Property Used Partly for Business or Rental, Part business or rental. Military onesource tax Publications (see Tax help) Publicly traded securities, rollover of gain from, Rollover of Gain From Publicly Traded Securities R Real property Depreciable, Depreciable real property. Military onesource tax Transfer at death, Transfers at Death Related persons, Sales and Exchanges Between Related Persons Condemned property replacement, bought from, Buying replacement property from a related person. Military onesource tax Gain on sale of property, Sales and Exchanges Between Related Persons Like-kind exchanges between, Like-Kind Exchanges Between Related Persons List, Related persons. Military onesource tax Loss on sale of property, Nondeductible Loss Patent transferred to, Related persons. Military onesource tax Replacement property, Replacement property. Military onesource tax , Replacement property to be produced. Military onesource tax Repossession, Foreclosures and Repossessions, Repossession. Military onesource tax Residual method, sale of business, Residual method. Military onesource tax Rollover of gain, Rollover of Gain From Publicly Traded Securities S Sale of a business, Sale of a Business Sales Bargain, charitable organization, Bargain sales to charity. Military onesource tax , Bargain sale to charity. Military onesource tax Installment, Installment Sales, Installment sale. Military onesource tax Property changed to business or rental use, Property Changed to Business or Rental Use Related persons, Sales and Exchanges Between Related Persons, Related persons. Military onesource tax Section 1231 gains and losses, Section 1231 Gains and Losses Section 1245 property Defined, Section 1245 Property Gain, ordinary income, Gain Treated as Ordinary Income Multiple asset accounts, Multiple asset accounts. Military onesource tax Section 1250 property Additional depreciation, Additional Depreciation Defined, Section 1250 property defined. Military onesource tax Foreclosure, Foreclosure. Military onesource tax Gain, ordinary income, Gain Treated as Ordinary Income Nonresidential, Nonresidential real property. Military onesource tax Residential, Residential rental property. Military onesource tax Section 197 intangibles, Section 197 Intangibles Severance damages, Severance damages. Military onesource tax Silver, Precious Metals and Stones, Stamps, and Coins Small business stock, Gains on Sales of Qualified Small Business Stock Specialized small business investment company (SSBIC), rollover of gain into, Rollover of Gain From Publicly Traded Securities Stamps, Precious Metals and Stones, Stamps, and Coins Stock Capital asset, Capital Assets Controlling interest, corporation, Controlling interest in a corporation. Military onesource tax Indirect ownership, Ownership of stock or partnership interests. Military onesource tax Property exchanged for, Property Exchanged for Stock Publicly traded securities, Rollover of Gain From Publicly Traded Securities Small business, Gains on Sales of Qualified Small Business Stock Suggestions, Comments and suggestions. Military onesource tax T Tax help, How To Get Tax Help Tax rates, capital gain, Capital Gains Tax Rates Thefts, Section 1231 transactions. Military onesource tax Timber, Timber, Section 1231 transactions. Military onesource tax Trade name, Franchise, Trademark, or Trade Name Trademark, Franchise, Trademark, or Trade Name Transfers to spouse, Transfers to Spouse U U. Military onesource tax S. Military onesource tax Treasury bonds, U. Military onesource tax S. Military onesource tax Treasury Notes or Bonds Unharvested crops, Section 1231 transactions. Military onesource tax Prev  Up     Home   More Online Publications
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The Military Onesource Tax

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