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My taxperson says my CS monthly income is an annuity and needs a special calculation that must take previous years income into consideration. Is she right? I thought I would need to put down the amount I received last year and that was that. Evidently it's not so simple!
Sydell
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Could you rephrase your question, please? And can you break up the text so it wraps around after 60 or so characters? Your message is difficult to read, and I find it difficult to understand the question.
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Greetings, Sydell, and welcome. You asked:

<<My taxperson says my CS monthly income is an annuity and needs a special calculation that must take previous years income into consideration. Is she right? I thought I would need to put down the amount I received last year and that was that. Evidently it's not so simple!>>

She's almost certainly correct, but you don't give us enough to say for sure. You're in the best position to determine that, though. For procedures on handling annuity taxation, see IRA Publication 575 (Pension and Annuity Income) available for download at http://www.irs.ustreas.gov/prod/forms_pubs/index.html.

Regards..Pixy
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Your taxperson is correct. The reason you want to make this calculation is that not all of your annuity is taxable. You are permitted to deduct what you contributed to your retirement plan. However your contribution must be prorated. This calculation is for your benefit. There is an IRS publication 575 that discusses this and includes a worksheet to make the calculation. See http://www.irs.gov/forms_pubs/pubs/p575toc.htm

Keep the worksheet from year to year to track the amount of contribution has been deducted.
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My husband has had a CS annuity for ages and I am the one who files the tax returns. This does not make me an expert, but I do not recall doing anything like what your post suggests. Over the last years, I have used TaxCut very successfully for an unusually complex return, involving not only my husband' annuity, but several trust funds and an independently (and foolishly)managed portfolio as well as some rental property. So far, so good. That said, I will probably hear from the IRD tomorrow! Still, I simply cannot imagine hiring someone to feed the info into **their**computer when I have to do all the work of assembling the stuff anyway. It would be worth the #10 bucks or so it would cost for the software just to run your info through the Q&A of TaxCut to find out what they say. If they make a mistake, they pay any resulting penalties so long as you have entered the correct info. I understand that Turbotax (and possibly others) do the job just as well. I just happenned to get started with TaxCut and have stayed with it. This is not a plug for a particular software program.
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