If you have an annuity that was started before 1986, the unrecovered cost is deducted as a miscellaneous deduction on the tax return. The total amount excluded paid to the employee and survivor annuitant cannot exceed the cost basis of the annuity. Once the cost has been recovered, any further payments are taxable on the return.
Where do I enter my unrecovered investment pension (annuity)?
To enter the unrecovered cost into the return, make an entry in the:
- Federal Section
- Deductions
- Itemized Deductions
- Miscellaneous Deductions
- Unrecovered Investment in Pension
If you have an annuity that was started after 1987, the unrecovered cost is not deductible.