Publication 575 - Pension And Annuity Income - 2004 (Page 12 of 36) in pdf

full amount of any annuity payments received after 310

2. Divide the amount of your monthly payment by the

payments are paid must be included in gross income.

total amount of the monthly payments to all annui-

If Bill and Kathy die before 310 payments are made, a

tants.

miscellaneous itemized deduction will be allowed for the

3. Multiply the amount on line 4 of your worksheet by

unrecovered cost on the final income tax return of the last

the amount figured in (2) above. The result is your

to die. This deduction is not subject to the 2%-of-adjusted

share of the monthly tax-free amount.

gross-income limit.

Replace the amount on line 4 of the worksheet with the

Multiple annuitants. If you and one or more other annui-

result in (3) above. Enter that amount on line 4 of your

tants receive payments at the same time, you exclude from

worksheet each year.

each annuity payment a pro rata share of the monthly

tax-free amount. Figure your share in the following steps.

1. Complete your worksheet through line 4 to figure the

monthly tax-free amount.

Worksheet A. Simplified Method Worksheet for Bill Smith

(Keep for Your Records)

1. Enter the total pension or annuity payments received this year. Also, add this amount

to the total for Form 1040, line 16a, or Form 1040A, line 12a . . . . . . . . . . . . . . . . . . .

$ 14,400

2. Enter your cost in the plan (contract) at the annuity starting date . . . . . . . . . . . . . . . .

31,000

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. Otherwise, go to line 3.

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

310

4. Divide line 2 by the number on line 3

100

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 . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,200

6. Enter any amount previously recovered tax free in years after 1986 . . . . . . . . . . . . . .

–0–

7. Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31,000

8. Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,200

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, line 16b, or Form 1040A,

line 12b. Note: If your Form 1099-R shows a larger taxable amount, use the amount

on this line instead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 13,200

10. Add lines 6 and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.

1,200

11. Balance of cost to be recovered. Subtract line 10 from line 2 . . . . . . . . . . . . . . . . .

11.

$ 29,800

TABLE 1 FOR LINE 3 ABOVE

AND your annuity starting date was —

IF the age at annuity

before November 19,

after November 18,

starting date was...

1996, enter on line 3...

55 or under

300

360

56 – 60

260

310

61 – 65

240

260

66 – 70

170

210

71 or older

120

160

TABLE 2 FOR LINE 3 ABOVE

IF the combined ages

at annuity starting

THEN enter

date were...

on line 3...

110 or under

410

111 – 120

360

121 – 130

310

131 – 140

260

141 or older

210

Page 12

Publication 575 - Pension And Annuity Income - 2004 Page 12

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