Do Annuities Get Reported to the IRS?

Shawn Plummer

CEO, The Annuity Expert

Do annuities get reported to the IRS?

Yes.

When you receive income from an annuity, it is reportable to the Internal Revenue Service (IRS). Here’s how it works:

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  1. Tax Forms: Annuity payments are typically reported on Form 1099-R.
  2. Taxable Amount: Part of the annuity payment may be taxable, depending on whether the annuity was purchased with pre-tax or after-tax dollars.
  3. Reporting Responsibility: The company that issues the annuity is responsible for sending Form 1099-R to both the IRS and the annuity owner.

Example

Suppose you have a deferred annuity that you purchased with after-tax dollars. When you start receiving payments, part of each payment is a return of your original after-tax investment (which is not taxable), and part is earnings (which is taxable).

Tax Reporting of Annuity Payments

Type of AnnuityTax Form UsedTaxable PortionNotes
Immediate AnnuityForm 1099-REarnings portionPurchased with pre-tax dollars
Deferred AnnuityForm 1099-REarnings portionPurchased with after-tax dollars

Conclusion

Understanding how annuities are taxed and reported to the IRS is crucial for proper financial planning. It’s important to consider the tax implications of your annuity payments and report them accurately. If you have questions about your specific situation, consulting a tax professional is advisable. Remember, proper reporting ensures compliance with IRS regulations.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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