Section - Annuities - Life Annuity Payments
3 important questions on Section - Annuities - Life Annuity Payments
How do taxpayers determine the nontaxable portion of each annuity payment for a life annuity?
Divide the original investment by the appropriate life expectancy factor from an IRS table
What happens if a taxpayer lives longer than the IRS estimated life expectancy?
The entire amount of any additional payments received are taxable.
What occurs if a taxpayer dies before receiving the expected number of payments?
The remaining unrecovered investment is deducted on the taxpayer's final income tax return.
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