To calculate the taxable amount of an annuity payment,the taxpayer must determine the expected return under the contract.

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To determine the taxable amount of an annuity payment, the taxpayer must calculate the expected return under the contract. This calculation takes into account the amount contributed to the annuity, the length of the payout period, and the applicable interest rates. The taxable amount is then calculated based on the portion of each payment that represents a return of the taxpayer's original investment (which is not taxable) versus the portion that represents earnings or gains (which is taxable).

To Calculate the Taxable Amount of an Annuity Payment,the Taxpayer