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Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3153
Experience:  EA, CEBS - 35 years experience providing financial advice
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What would the federal and state taxes be on $26,000 and what

Customer Question

What would the federal and state taxes be on $26,000 and what would the early penalty be on an annuity?
Submitted: 7 years ago.
Category: Tax
Expert:  Bill replied 7 years ago.

The amount of tax would depend on your filing status, other income, deductions, and the amount of taxable income incurred on the surrender of the annuity. If it is a nonqualified annuity then the taxable portion is the difference between the proceeds received (assuming the entire contract is surrendered) and the total investment in the contract. If it is a qualified annuity (a retirement account such as an IRA or 403(b)) then the entire amount is taxable unless you had after-tax contributions in prior years (these would be recovered tax-free).


There is a 10% penalty on the taxable income portion if withdrawn prior to age 59 1/2.


The amount of state income tax would depend on the your state of residence.

Bill and 2 other Tax Specialists are ready to help you
Customer: replied 7 years ago.
So would you have an amount that I should hold out on both?
Expert:  Bill replied 7 years ago.
Is the annuity a retirement account? Is the $26,000 the total value of the annuity or is that the taxable amount? What state do you reside in? How old are you? What is your filing status and the amount of your other income?