Publication 939
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General Rule for Pensions and Annuities
Overview
This publication gives you the information you need to determine the tax treatment of your pension and annuity income under the General Rule. Generally, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your net cost, and the taxable balance.
What is the General Rule
The General Rule is one of the two methods used to figure the tax-free part of each annuity payment based on the ratio of your investment in the contract to the total expected return.
The other method is the Simplified Method, which is discussed in Publication 575, Pension and Annuity Income.
