Not sure why your 1099-R income has been included in your taxable income. What codes are in Box 7 on your 1099-R? It could be that your distribution is showing as taxable because the codes in Box 7 reflect that the distribution is not qualified. Moreover, it's possible that your 1099-R does not have the correct codes. Therefore, follow-up with additional information as necessary and let us know the type of account you have, i.e., traditional IRA, Roth IRA, 401(k), pension, etc. Additionally, how long have you held the account, and your age. As a reminder, if you do post additional information, do not include personal identifiable information.
Generally, investment losses in retirement accounts are not deductible. In other words, you cannot reduce your income by the loss you realized. The result would be different if the annuity (or other investment) was in a non-retirement type account. In that circumstance, you would be able to claim the loss.
@Liang123
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