My husband is retired and receives income from an annuity. Does Pennsylvania tax income from an annuity?
If you invest in a retirement annuity that is not part of an employer-sponsored program or a commonly recognized retirement program, you may have Pennsylvania taxable income when you begin receiving annuity payments. You must report the amount reported as taxable for federal income tax purposes as taxable interest on a Pennsylvania Schedule A.
Annuity income that is part of a qualified retirement plan, and the recipient has reached age 59 1/2, is not subject to Pennsylvania income tax. For nonqualified annuities, the earnings are taxable but the return of contributions would not be taxable to Pennsylvania.
Answered by: David S. Markle, CPA, owner of Markle Wealth Management in Danielsville.