Question

A taxpayer paid $84,672 for an annuity that pays $1,200 per month for life. Per tables...

A taxpayer paid $84,672 for an annuity that pays $1,200 per month for life. Per tables provided by the IRS, the taxpayer's remaining life expectancy is 16.8. If she receives 12 payments this year, how much will be taxable?

a) $ 5,040

b) $ 0

c) $14,400

d) $ 9,360

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Answer #1

Answer
If she receives 12 payments this year, than the taxable amount will be $0.

Explanation

The IRS allows you to choose any filing status that you are eligible for. This is important since the amount of your standard deduction will vary depending on which filing status you choose. For example, single filers can claim a standard deduction of $12,200; however, if you also qualify to file as head of household, your deduction increases to $18,350.

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