I asked the question before, but not satisfied with answer. Here is detail:
I have an annuity accout with metlife.
My cost base is 77,000 and I closed it last yeat with 70,000 remained.
I received 1099- R from metlife and showed above.
I used Turbo Tax and typed all number from 1099-R
1040 , line 16a showed 70,000, 16 b (taxale amount) is 0.
I’m happy with taxable amount is 0. But I actually have loss 7,000.
Turbo Tax didn’t show 77,000 cost base anywhere nor does it indicate the 7,000 loss.
Where to report the 7,000 loss? someome said go to schedule A , line 23; but it’s “other expense” not loss.
Please help!
THIS IS NOT IRA OR ROTH, IT IS ANNUITY EARLY CLOSE.
Cat
March 16, 2010 at 7:53 pm
“losses” do not show from IRA’s and annuities. You just have less money to pull out at the end.
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Ah – then it’s going to be one of those “It depends” answers.
A lot to go through and ask. See details here:
http://www.fool.com/personal-finance/taxes/2006/08/11/deducting-annuity-losses.aspx
exirsman
March 16, 2010 at 7:55 pm
On this matter it is best to see a tax professional (CPA or Enrolled Agent). If the loss is due to a “surrender charge” by the insurer, you might be able to claim it.
The conservative approach is to treat your loss as a “Miscellaneous Deduction.” This means you include it in with all your other Itemized Deductions. You get a deduction to the extent that your total Itemized Miscellaneous Deductions exceed 2% of your Adjusted Gross Income (AGI).Depending on your income, the AMT might impact your ability to get the full benefit.
Here’s the more risky approach: Instead of listing your annuity loss as a “Miscellaneous Deduction,” you could put it under “Other Gains/Losses.” An ancient IRS Revenue Ruling that goes way back to the early 60s supports this method. If you do it this way, the AMT doesn’t have the same impact if you are a high income person. However, it is not a settled issue and could be an audit risk.
I would not try and claim a loss if you had no surrender charge. Please see a tax pro. It is worth the cost.