My Father passed away(here in Texas) a month ago and left around $200,000.00 in combined annuities, certificates of deposit, savings and life insurance to be divided up among 4 children. Are we each required to pay Federal Income Tax or an Inheritance Tax of some kind on each of our lump sum payments of around $50,000.00 each? Just wondering, because there were papers that I was signing today and I was supposed to check one of 2 boxes that said: "Deduct tax from lump sum payment" or "Do NOT deduct tax from lump sum payment". What am I supposed to do? I didn't check either one,(yet) because I've read other information that stated there are NO taxes due on inheritance money, since that money had already been taxed. If I DO pay taxes, is it better to wait and just report on 2007 return? Someone please help me. Thank you.

My Father passed away(here in Texas) a month ago and left around $200,000.00 in combined annuities, certificates of deposit, savings and life insurance to be divided up among 4 children. Are we each required to pay Federal Income Tax or an Inheritance Tax of some kind on each of our lump sum payments of around $50,000.00 each? Just wondering, because there were papers that I was signing today and I was supposed to check one of 2 boxes that said: "Deduct tax from lump sum payment" or "Do NOT deduct tax from lump sum payment". What am I supposed to do? I didn't check either one,(yet) because I've read other information that stated there are NO taxes due on inheritance money, since that money had already been taxed. If I DO pay taxes, is it better to wait and just report on 2007 return? Someone please help me. Thank you.
My mother left 3 annuities , total approx 450,000.00 she lives in Texas I live in Illinois will I pay a tax as income or is this considered inheritance and is tax free