both my wife and i are senior citizens.
2006-11-29 08:35:24 · 3 answers · asked by honeywockle 1 in Business & Finance ➔ Taxes ➔ United States
Anything you recieve back that is more than what you paid is taxable income. Return on what you paid is non-taxable recovery of basis. If the annuity is given in periodic payments, for each payment a proportion will be deemed taxable income and a portion will be deemed recovery of basis. To determine what % of each payment that is nontaxable you need to divide what you paid for the annuity by the expected return. apply that percentage to each payment to determine what % of each payment is nontaxable. everything else is taxable.
2006-11-29 10:06:48 · answer #1 · answered by Two E 2 · 0⤊ 0⤋
You will receive a 1099-R showing taxable and nontaxable portions. If some of your annuity is a return of your investment that portion is nontaxable. If you need to know now call your annuity company for advice.
2006-11-29 08:57:44 · answer #2 · answered by spicertax 5 · 1⤊ 0⤋
The increase over what you paid is always taxable. It is taxable to you, your wife or to your heirs if there is something left after both deaths.
2006-11-29 09:00:50 · answer #3 · answered by waggy_33 6 · 0⤊ 0⤋