Should I be charged a premium tax on an annuity?

by David M. Lastowski, CPA | May 04, 2018
I am a Pennsylvania resident, and I am in the process of a Section 1035 Direct Transfer of my annuity. I received a notice from the insurance company transferring my annuity that I have incurred a charge of $203.89, identified as a state premium tax, on a balance of $32,016.23. Is this correct?

Answer: Pennsylvania does not have a premium tax on annuities. The state where the annuity company is located (or if you bought the annuity while you were a resident of another sate) may have a state premium tax. You will need to check with the company for more information on the tax. 

There are many details that will affect how you should proceed. Talk to a financial advisor about your options and next steps. To find a CPA in Pennsylvania, ask your family or friends for a recommendation or consult the CPA Locator.

Answer By: David M. Lastowski, CPA, is the owner of David M. Lastowski CPA. 

***Answer originally published July 1, 2014.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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