Federal Survivor Annuity-Death of Annuitant "Balance of Cost to Be Recovered"
My mother received a pension annuity payment from the government as a Federal Survivor Annuitant. My mother passed away in 2021 before using all of her tax free benefit credit. The 1099 shows "taxable amount" of her 2021 gross distribution as UNKNOWN. Turbo Tax took me through the Simplied Method of calculating the taxable portion of her gross distribution. After that calculation she is able to reduce the taxable amount of the gross distribution by approximately $3K. Theres is $10K left over on the Simplied Worksheet as the "Balance of Cost to be recovered"
The IRS guidelines say that that $10K "Balance of Cost to be Recovered" can be used as a miscellaneous itemized deduction. My tax preparer believes that my mother is entitled to claim the entire $10K balance + the $3K, calculated from the Simplified Method, on line 2B on the 1099 thereby reducing her gross taxable income on the 1040.
