A relative had purchased an annuity for me years ago, which was payable upon her death. I was instructed to cash in the annuity, which I did. Is the annuity fully taxable as income on my IRS return? Is the gross distribution listed in box 1 added to my income, and therefore fully taxable? Or do I list the amount in box 2a (taxable amount) as income, making the distribution only partially taxable?
The "basis" is not taxable. The rest of it is taxable. If you do not know how to compute the amount of basis, then assume that the form is correct.
However, all of it, including the non-taxable portion, must be reported.
You must enter the entire amount of the distribution (box 1) as pension and annuity income (Form 1040, line 16a). You enter only the taxable amount (box 2a unless you think it is wrong) as the taxable amount (Form 1040, line 16b).
February 14th, 2010 at 12:35 am
put the information in exactly as it is. it is added to your income.
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February 14th, 2010 at 1:02 am
The "basis" is not taxable. The rest of it is taxable. If you do not know how to compute the amount of basis, then assume that the form is correct.
However, all of it, including the non-taxable portion, must be reported.
You must enter the entire amount of the distribution (box 1) as pension and annuity income (Form 1040, line 16a). You enter only the taxable amount (box 2a unless you think it is wrong) as the taxable amount (Form 1040, line 16b).
References :
February 14th, 2010 at 1:38 am
You show both the full amount and the taxable amount on your return, but only pay tax on the taxable amount. The difference is due to the purchase price of the annuity.
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