Deductions & credits

When an annuity becomes worthless, it is generally treated as a capital loss for tax purposes1. According to the IRS, you can deduct a loss for a worthless security, including annuities, in the tax year in which it becomes totally worthless1.

To claim this deduction, you'll need to provide evidence that the annuity has indeed become worthless2. It's a good idea to consult with a tax professional to ensure you're handling it correctly and to understand    how it impacts your specific tax situation.

note that the Kiplinger Blog 1 never mentions annuities specifically.  the other issue you have is knowing your tax basis in it. it may not be what you put in. it is also somewhat surprising because failed insurance companies are generally taken over by others that assume the responsibility.

if you invested in a scam that's a different matter completely.