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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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I purchased an annuity for $30,000 in June of 2012. In August

Customer Question

I purchased an annuity for $30,000 in June of 2012. In August of 2015 I had to cash in that annuity. I received a check for 25,099.88 after deductions for the surrender and withdrawal fee of $1688.94, State withholding fee of $1,523.45, and federal withholding fee for $2,958.15. The interest I earned on the annuity over the 3 year period amounted to $1,270.42. Am I right to believe that I should only be taxed on the amount of interest I earned and not the full value of the annuity which was purchased with money that had already been taxed? If this is the case, how do I report this on my tax returns?
Submitted: 6 months ago.
Category: Tax
Expert:  Lev replied 6 months ago.
Yes - your understanding is correct.
Expert:  Lev replied 6 months ago.
You should have form 1099R reporting that transaction /box 1 reports total distribution -->> that amount will go to form 1040 line 2a reports taxable part of distribution -->> that amount will go to form 1040 line 16b - based on your information - it should be 4 reports federal income tax withholding -->> that amount will go to form 1040 line 64box 12 reports state income tax withheld -->> that amount will be deducted on schedule A line 5 and in additional you will use that amount on your state income tax return.Let me know if you need any clarification with reporting...I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.

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