Question

when using simplified method for computing taxable portion of a pension use the age of the annuitant on which date

Answer 1

Use the Simplified Method to figure the tax-free part of the payments if:

1. Your annuity starting date was after July 1, 1986, and you used this method last year to figure the taxable part.
2. Your annuity starting date was after November 18, 1996, and both of the following apply:
   1. The payments are from a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity.
   2. On your annuity starting date, either you were under age 75 or the number of years of guaranteed payments was fewer than 5.

The Simplified Method Worksheet helps you figure the taxable and tax-free parts of your annuity payments each year.

Worksheet A. Simplified Method

1. Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040 or 1040-SR, line 4c; or Form 1040-NR, line 17a ....................................	1...........
2. Enter your cost in the plan (contract) at the annuity starting date plus any death benefit exclusion.* See Cost (Investment in the Contract), earlier ................................................... Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Otherwise, go to line 3.	2............
3. Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below ................................................................................	3..........
4. Divide line 2 by the number on line 3 ......................................................	4.............
5. Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. Otherwise, go to line 6 ..................................................................	5..............
6. Enter any amounts previously recovered tax free in years after 1986. This is the amount shown on line 10 of your worksheet for last year .....................................................	6..............
7. Subtract line 6 from line 2 ..............................................................	7...............
8. Enter the smaller of line 5 or line 7 ........................................................	8...............

9. Taxable amount for year. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, add this amount to the total for Form 1040 or 1040-SR, line 4d; or Form 1040-NR, line 17b. Note: If your Form 1099-R shows a larger taxable amount, use the amount figured on this line instead. If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers, earlier, before entering an amount on your tax return ........................................	9...............
10. Was your annuity starting date before 1987? Yes. STOP. Don’t complete the rest of this worksheet. No. Add lines 6 and 8. This is the amount you have recovered tax free through 2018. You will need this number if you need to fill out this worksheet next year .....................................	10...............
11. Balance of cost to be recovered. Subtract line 10 from line 2. If zero, you won’t have to complete this worksheet next year. The payments you receive next year will generally be fully taxable ........ A death benefit exclusion (up to $5,000) applied to certain benefits received by employees who died before August 21, 1996	11.............

Table 1 for Line 3 Above IF the age at annuity starting date was ... AND your annuity starting date was— BEFORE November 19, 1996, enter on line 3 ... AFTER November 18, 1996, enter on line 3 ... 55 or under 300 360 56–60 260 310 61–65 240 260 66–70 170 210 71 or over 120 160

Table 2 for Line 3 Above IF the combined ages at annuity starting date were ... THEN enter on line 3 ... 110 or under 410 111–120 360 121–130 310 131–140 260 141 or over 210