Are You Really Going to Tax That? Learn About the Taxation of Annuities

Generally, the way an annuity is treated depends on the type of annuity and its inherent features and benefits. This practice note addresses the specifics of the treatment for fixed, variable, immediate, deferred, and hybrid annuities. Review how income taxation of annuities is generally governed under I.R.C. Section 72, which covers what is taxable and what is excluded.

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Related Content

• Distributions from Pensions, Annuities, etc. (IRS Form 1099-R): Guidance for Completing, Filing, and Amending
  Learn about the reporting of annuity distributions. Form 1099-R is required to be filed for each person to whom you have made a designated distribution or are treated as having made a distribution of $10 or more from a profit-sharing or retirement plan, any individual retirement arrangement (IRA), and an annuity contract, pension, insurance contract, survivor income benefit plan, or distributed permanent and total disability payments under a life insurance contract, or charitable gift annuity. 

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.   

•  Tax Key Legal Developments Tracker (Federal)—keep up to date with key legal developments!
  • Business Entities. IRS released guidance describing the information that must be included in a written report described in  Reg. § 1.45Q-4(c)(2)(LCA Report). The guidance provides procedures a taxpayer must follow to submit an LCA Report and required supporting information to the IRS and the Department of Energy for review under Treas. Reg. § 1.45Q-4(c)(5) before any credit for carbon oxide sequestration allowed under I.R.C. § 45Q(a)(2)(B)(ii) or (a)(4)(B)(ii) is determined for qualified carbon oxide utilized by the taxpayer (§ 45Q utilization credit). I.R.S. Notice 2024-60.
• Excise Taxes and Credits. IRS and Treasury issued final regulations providing guidance regarding the reporting and payment of the excise tax on repurchases of corporate stock made after December 31, 2022. The regulations affect certain publicly traded corporations that repurchase their stock or whose stock is acquired by certain specified affiliates. 89 Fed. Reg. 55045 (July 3, 2024).
• Inflation Reduction Act: Tax Provisions Tracker—keep up to date with key legal developments regarding the Inflation Reduction Act of 2022.
• Document alertsallow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts. 
• For Practical Guidance content on important recent trends, review these easy-to-use Resource Kits on a variety of emerging topics:
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• Review this guidance, AI and Legal Ethics: What Lawyers Need to Know, in the Summer Edition of the Practical Guidance Journal. Explore insights from a judge into the use of GenAI in civil litigation, including discovery issues, use cases, and key takeaways. Also advance your career with professional and business development guidance.
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• Legal Developments provide the latest updates and analyses of emerging topics impacting your practice area. Visit the Legal Developments page to see the latest topics, which also include breaking legal news and related Practical Guidance content. 
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