Cynthia, age 64, retired in June. Starting in July, Cynthia received $2,000 per month from an annuity She has contributed $260,000 to the annuity. Her life expectancy is 20 years. How much is excluded from income using the simplified method? Use 260 as the factor to divide by. 1. Enter total amount received this year 2. Enter cost in plan at the annuity starting date 3. Factor at annuity starting date 260 4. Divide line 2 by line 3 5. Multiply line 4 by the number of monthly payments this year 6. Amount, if any, recovered tax free in prior years 7. Subtract line 6 from line 2 8. Enter the smaller of line 5 or 7 9. Taxable amount this year. Subtract line S from line 1