Question

When the monthly annuity income benefits are paid to the annuitant...

A. They are tax-exempt.
B. They are subject to a fixed tax rate.
C. They are tax-deductible for the insurance company.
D. They are subject to regular income tax.

Answer 1

When annuity income benefits are paid to the annuitant, they are subject to regular income tax.

Step-by-step explanation:

When the monthly annuity income benefits are paid to the annuitant, they are subject to regular income tax. An annuity is a contract between an individual and an insurance company, where the individual makes regular premium payments and, in return, receives a stream of income payments in the future. These income payments are taxable as ordinary income for the annuitant.