Question

Ginger purchased a single-premium deferred annuity ten years ago at age 45. She used $40,000 of after-tax funds she had accumulated over fifteen years. She decides to surrender the annuity for a lump-sum distribution of its $90,000 value. Which of the following statements is correct?
Group of answer choices
Ginger will owe income taxes on $50,000
Ginger will owe income taxes on $90,000.
Ginger will owe income taxes and a 10% penalty on $90,000.
Ginger will owe income taxes and a 10% penalty on $50,000.

Answer 1

Ginger will owe income taxes and a 10% penalty on $50,000 of the following statements is correct.

Taxable Amount = ( $90,000 - $40,000 ) = $50,000

As the Distribution of Fund is at age 45 which is less than 59.5 , then it subject to 10% penalty

An income tax is a tax imposed on people or entities in respect of the earnings or income earned by means of them. profits tax usually is computed because the made of a tax charge instances the taxable income. Taxation quotes may additionally vary by kind or characteristics of the taxpayer and the kind of earnings.

For instance, if you earn $1,000 in a kingdom with a flat earnings tax fee of 10%, $one hundred in earnings taxes have to be withheld from your paycheck whilst you earn that profits.

Learn more about income taxes here:brainly.com/question/26316390
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