Publication 721 (2006), Tax Guide to U.S. Civil Service Retirement Benefits

Publication 721 - Additional Material

This is archived information that pertains only to the 2006 Tax Year. If you
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Table of Contents

Worksheet A. Simplified Method See the instructions in Part II of this publication under Simplified Method.

1.	Enter the total pension or annuity payments received this year. Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a			1.
2.	Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion ^*			2.
	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.			3.
4.	Divide line 2 by 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, skip lines 6 and 7 and enter this amount on line 8. 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, line 16b, or Form 1040A, line 12b. If you are a nonresident alien, enter this amount on line 1 of Worksheet C. If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount on this line instead			9.
10.	Was your annuity starting date before 1987? Yes.STOP. Do not complete the rest of this worksheet. No. Add lines 6 and 8. This is the amount you have recovered tax free through 2006. 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 will not have to complete this worksheet next year. The payments you receive next year will be fully taxable			11.
Table 1 for Line 3 Above
	IF your age on your annuity starting date was	AND your annuity starting date was—
	IF your age on your annuity starting date was	before November 19, 1996, THEN enter on line 3	after November 18, 1996, THEN 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 annuitants' combined ages on your 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

* A death benefit exclusion up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996.

Worksheet B. Lump-Sum Payment See the instructions in Part II of this publication under Alternative Annuity Option.

1.	Enter your lump-sum credit (your cost in the plan at the annuity starting date)	1.
2.	Enter the present value of your annuity contract	2.
3.	Divide line 1 by line 2	3.
4.	Tax-free amount. Multiply line 1 by line 3. (Caution: Do not include this amount on line 6 of Worksheet A in this publication.)	4.
5.	Taxable amount (net cost in the plan). Subtract line 4 from line 1. Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Also, enter this amount on line 2 of Worksheet A in this publication.	5.