Question

Lola, age 62, began receiving a $2,000 monthly annuity in the current year upon the death of her husband. She received eight payments in the current year. Her husband contributed $40,000 to the qualified employee plan. Use the Simplified Method Worksheet below to calculate Lola’s taxable amount from the annuity.
Simplified Method Worksheet
1. Enter total amount received this year. 1. _______________
2. Enter cost in the plan at the annuity starting date. 2. _______________
3. Age at annuity starting date
Enter
55 and under........... 360
56–60.............. 310
61–65............. 260 3. _______________
66–70............. 210
71 and older........... 160
4. Divide line 2 by line 3. 4. _______________
5. Multiply line 4 by the number o monthly payments
this year. If the annuity starting date was before 1987,
also enter this amount on line 8, and skip lines 6 and 7.
Otherwise, go to line 6. 5. _______________
6. Enter the amount, if any, recovered tax free in prior 6. _______________
years.
7. Subtract line 6 from line 2. 7. _______________
8. Enter the smaller of line 5 or 7. 8. _______________
9. Taxable amount this year: Subtract line 8 from line 9. _______________
1. Do not enter less than zero.


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  • CreatedJuly 16, 2015
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