annuity distribution

gb54 · ‎February 6, 2021

My parent had savings accounts around $150k that the bank suggested she put into an annuity account for 5 years. It's matured, and she withdrew the funds and put them back into savings. The 1099R indicates that the Gross Distribution was the original investment + the interest earned, which makes sense because she did take it all. However, TT is including the entire amount as her income, (it is showing her taxable income correctly as the interest earned in box ), but I don't think it's correct to include the whole thing in her income since the original investment was her money to begin with. It is indicating on the tax form that it was income. Is there something I'm missing?

macuser_22 · ‎February 6, 2021

It will show as income on the summary screen which shows gross income, not taxable income.

The IRS requires reporting all income on a *income* tax return - taxable and not-taxable.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

dmertz · ‎February 6, 2021

The entire gross is "income" in the sense that it must be included on Form 1040 line 5a, but only the taxable amount that is included on line 5b has any effect on the rest of your tax return. This distribution is part taxable income and part nontaxable income as defined in the tax code.

gb54 · ‎February 6, 2021

Maybe I'm just hung up on the semantics. It shouldn't be called income since it isn't. But that appears to be an IRS issue, not a TT one.

Thanks!

annuity distribution

Retirement tax questions

Retirement tax questions

Retirement tax questions