The "General Rule" is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. Although IRS Publication 575 Pension and Annuity Income will help you determine whether you can use the General Rule, it will not help you use it to determine the tax treatment of your pension or annuity income. For that and other information on the General Rule, see Publication 939, General Rule for Pensions and Annuities.

The TaxAct program supports the Simplified Method for calculation of the taxable portion of your pension or annuity, but it does not support the General Rule. The workaround for this is to calculate the taxable amount manually, then enter the data in the Simplified Method Worksheet so that the taxable amount on Line 9 is the taxable amount you calculated manually. The data entered on the worksheet does not get transmitted to the IRS, so the figures you enter are not important other than to generate the proper taxable amount. The gross amount will show on Form 1040 U.S. Individual Income Tax Return, Line 4a, and the taxable amount from Line 9 of the worksheet will go to Line 4b.

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