How Do You Pay Taxes On A CD Type Annuity?
If you have a CD type of annuity, or any type of annuity, taxes are only paid on it if you take a distribution. An annuity is an investment vehicle for retirement that is actually an insurance product. A CD type annuity is one that is a fixed interest annuity, which means that there is a guaranteed interest rate and term. Once that term expires you have full access to the principal and interest earned. You can then reinvest in another annuity or keep the money as a distribution. If you are taking a distribution you will have to pay taxes on the money. Wait for a copy of the 1099R form to come in the mail from the investment company that has your CD annuity. Typically these are mailed out by January 1st of each year. Use the IRS form 1040 or income tax software, such as Turbo Tax or H&R Block Tax Cut, to prepare your federal taxes. Check your 1099R form to see if there is an amount listed in box 2a. This is where the taxable amount from the CD annuity is listed. It may differ from the a
