Taxpayers may be able to use the Simplified Method to calculate the taxable portion of their pension or annuity.
There are differences between the entries for each tax year. Select the link that applies to you to move to that section of the article.
Using the Simplified Method Worksheet for the 2023 Tax Year or Earlier
Using the Simplified Method Worksheet for the 2024 Tax Year or Later
Using the Simplified Method Worksheet for the 2023 Tax Year or Earlier
1. Complete the entries for Form 1099-R/ RRB-1099-R.
2. The taxable amount in Box 2a should match the amount in Box 1. Do not adjust the taxable amount in Box 2a.
3. Select Click here for options below Box 2a.
4. Select Simplified Method Worksheet.
5. Complete the entries. Below, an explanation is provided for each entry.
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Plan cost at annuity start date
- The taxpayer's cost is generally their net investment in the plan as of the annuity starting date. It doesn't include pre-tax contributions. The taxpayer's net investment may be shown in Box 9b of Form 1099-R. If it isn't, see the instructions under "Cost (Investment in the Contract)" in Publication 575 for more information on calculating the cost.
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Starting date of annuity
- The taxpayer's annuity starting date is the later of the first day of the first period for which they received a payment or the date the plan's obligations became fixed.
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Check here if this is a Joint or Survivor Annuity
- Check this if these payments are made for the taxpayer's life and the life of their surviving spouse or other qualifying beneficiary.
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Death benefit exclusion
- If the taxpayer is the beneficiary of a deceased employee or former employee who died before August 21, 1996, include any death benefit exclusion that they are entitled to (up to $5,000).
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Age of recipient at start date
- Enter the taxpayer's age on the annuity starting date. If "Joint or Survivor Annuity" is checked, enter the taxpayer's and the spouse's age on the annuity starting date.
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Number of months paid in 20XX
- The number of months for which this year's payments were made.
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Amounts previously recovered
- The amount, if any, recovered tax free in years after 1986. If they completed this worksheet last year, enter the amount from Line 10 of last year's worksheet.
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Public Safety Officer Exclusion for Health Insurance Premiums
- The Public Safety Officer Exclusion that should be subtracted from the amount carried to Line 5b of the Form 1040 (up to $3,000).
6. Select Continue to save your entries. The software will calculate the taxable amount using the Simplified Method Worksheet.
Using the Simplified Method Worksheet for the 2024 Tax Year or Later
1. Complete the entries for Form 1099-R/ RRB-1099-R.
2. The taxable amount in Box 2a should match the amount in Box 1. Do not adjust the taxable amount in Box 2a.
3. Select Click here for options below Box 2a.
4. Select Simplified Method Worksheet.
5. Complete the entries. Below, an explanation is provided for each entry.
-
Plan cost at annuity start date
- The taxpayer's cost is generally their net investment in the plan as of the annuity starting date. It doesn't include pre-tax contributions. The taxpayer's net investment may be shown in Box 9b of Form 1099-R. If it isn't, see the instructions under "Cost (Investment in the Contract)" in Publication 575 for more information on calculating the cost.
-
Starting date of annuity
- The taxpayer's annuity starting date is the later of the first day of the first period for which they received a payment or the date the plan's obligations became fixed.
-
Check here if this is a Joint or Survivor Annuity
- Check this if these payments are made for the taxpayer's life and the life of their surviving spouse or other qualifying beneficiary.
-
Death benefit exclusion
- If the taxpayer is the beneficiary of a deceased employee or former employee who died before August 21, 1996, include any death benefit exclusion that they are entitled to (up to $5,000).
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Combined calculated age of annuitants at start date
- The taxpayer's age on the annuity starting date. If "Joint or Survivor Annuity" is checked, this is the taxpayer's and the spouse's age on the annuity starting date.
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Adjust the calculated age of annuitants, if its different
- Use this entry to adjust the age that the software calculated. You can enter a negative number to reduce the age or a positive number to increase it.
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Number of months paid in 20XX
- The number of months for which this year's payments were made.
-
Amounts previously recovered
- The amount, if any, recovered tax free in years after 1986. If they completed this worksheet last year, enter the amount from Line 10 of last year's worksheet.
-
Public Safety Officer Exclusion for Health Insurance Premiums
- The Public Safety Officer Exclusion that should be subtracted from the amount carried to Line 5b of the Form 1040 (up to $3,000).
6. Select Continue to save your entries. The software will calculate the taxable amount using the Simplified Method Worksheet.
Note: This is an article on using TaxSlayer's software. It is not intended as tax advice. For more details on this topic, see Additional Information below.
Additional Information
Railroad Board Explanation of Form RRB-1099-R
IRS Publication 575, Pension and Annuity Income