My wife, age 68, purchased an annuity last year which pays her a fixed amount each month for the remainder of her life. When she dies her estate will receive a payment of at least what she paid to purchase the annuity and possibly even more if the assets the annuity funds are invested in appreciate.
Are the payments she's receiving from that kind of annuity taxed as ordinary income?
If not, where do I look to find out what portion of that income is taxable.
She also purchased a similar annuity in her IRA last year, and I understand that all payments from that annuity are considered as withdrawals from her IRA and thus taxable as ordinary income. (Please correct me if I'm wrong about that.)
Thanks,
Jeff