Bookkeeping Dictionary
Annuity
A periodic payment, whether for a period certain or for one or more lives. Under the general rule for taxing an annuity, the taxpayer's investment in the contract is usually divided by the number of payments expected, and that portion of each payment is nontaxable. The remainder of each payment is taxable as received. The Internal Revenue Service provides tables for computing tax-free portions of annuity receipts.