taxable amount of annuity insurance payment

[Amylee4705]

Hi, I have been paying taxes on the dividends and interest of an annuity insurance policy for the last 30+ years. That policy has matured and now I'm receiving payments. How much of the payment is taxable?

The premium was post tax payment, and every year the company sent the IRS and myself the amount of dividend and interest the policy accrued. I paid taxes every year on those dividends and interest.

[BillM223]

I am assuming that this is a non-qualified annuity. In this case, the return of "basis" (the amounts you put in post-tax) is tax-free. Is the administrator going to comingle the dividends and interest and basis or continue to report them separately?

[Amylee4705]

Yes it is. On the 1099-R it shows the separation from the basis and the rest is the interest and dividends that they say are taxable. The thing is, is that we've received a 1098, 1099, & 5498 combined statement for the interest and dividends earned over the years, and we've added those amounts to our taxable income every year. Doesn't that make that amount doubly taxed for the next five years that we are collecting that annuity? Should we not have added the accrued interest and dividends on our taxes over the years and now we are S O L (so out of luck) and still have to add it as taxable income? 

[ThomasM125]

The interest income reported to you in the current year may be interest earned this year on your previously taxed contribution base. As in previous years, you pay tax on the interest income applicable to the current year. If that is the case you would not be doubled taxed.