I took a loss when cashing in an annuity. How do I report it so that I deduct it?

You can deduct a loss on an annuity if the annuity was fully liquidated and there was a loss on the account. The loss would be deductible as a miscellaneous itemized deduction subject to the 2% of adjusted gross income floor. If there were withdrawals or distributions prior to the liquidation, those would have to be accounted for as recovery of your investment.

To take a deduction like this, follow these steps:

1. Login to your return.
2. Click on the Federal option in the left hand navigation bar.
3. Click on the Deductions and Credits tab at the top of the screen.
4. Scroll down in the list of Deductions and Credits to the option section labeled Other Deductions and Credits.
5. Click on the option labeled Other Deductible Expenses.
6. Continue until your each a screen labeled "Did you have any of these other deductions?" and click Yes.
7. Enter your loss in the line labeled "Unrecovered investment in annuity"