QUICKIE TAX TIPS

> IRS Free File is still available.

DEFENSE PENSION ERROR!

The Defense Finance and Accounting Service (DFAS) sent 2004 Forms 1099-R, Distribution From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRA, Insurance Contracts, to many military annuitants with incomplete information.

Along with the Form 1099-R, DFAS sent a letter indicating how much the annuitant paid to the Survivor Benefit Plan (SBP) or the Reserve Component Survivor Benefit Plan (RSFPP). DFAS told the retirees to take a "credit" or "an adjustment to income" on their 2004 Form 1040, U.S. Individual Income Tax Return, for the amounts paid.

This is incorrect information which may cause the delay of a refund or eventual notices from the IRS.

The military annuitants/taxpayers should include the gross income reflected in Box 1 of their 2004 Form 1099-R on either line 16a of the Form 1040 or on line 12a of Form 1040A, U.S. Individual Income Tax Return. They should report the net taxable pension (the gross pension less the SBP or RSFPP payments, but not below zero) on either line 16b or 12b. These numbers were included in the DFAS letter.

The Form 1099-R reflects gross payments made to the retiree. DFAS did not reduce these payments by the SBP or the RSFPP that were directly remitted to DFAS.

If the taxpayers have any questions, they can call the IRS toll-free number at (800) 829-1040.

[Or talk to your tax professional and get some help in case you've already filed and need to amend to get some money back.]