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Get your taxes done using TurboTax
Your final sentence is the key, all basis used, then the whole pension is taxable. Just so you know, Serving those who serve states:
Once the total contributions are repaid, the entire annuity is fully taxable. How much of the annuity is in fact taxable depends on several factors, including which method is used (General or the Simplified Rule) and how many survivors (spouse and children) are receiving survivor benefits.
The Simplified Method can be used if the annuity starting date is after July 1, 1986. The method must be used by surviving annuitants if the annuity starting date is after Nov. 18, 1996. Under the Simplified Methods each of the survivor annuitant’s monthly payments is made up of two parts: (1) The tax-free part that is a return of the employee’s cost, and (2) The taxable part that is the amount of each payment that is more than the part that represents the employee’s cost. The tax-free part remains the same, even if the annuity is increased due to cost-of-living allowances (COLAs).
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