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swede1104 · Apr 22, 2009, 07:16 AM

My mother originally deposited $32,000. Into a Indiv. Ret. Annuity ( I don't have info. Regarding what year she made this deposit. She was receiving yearly distributions (variable amounts)and paying taxes on the dist.. She passed away in 2003 at the age of 82. I inherited the IRA with a bal. of $26,000. I took yearly variable distributions and paid taxes accordingly on our 1040A Form. After 5 yrs. (Mar. 2009) I had to take a full distribution of this money ($20,000.) Do I have to pay taxes on the full distribution?

If both my mother & I have paid taxes on each distribution why do I have to pay more taxes when she originally deposited $32,000.

AtlantaTaxExpert · Apr 22, 2009, 09:42 AM

Your tax is based on the $20,000 distribution. Your tax is NOT $20,000, but more likely will be in the $4,000-to-$5,000 range.

If you did not know WHEN she made the deposit, how do you know what, if any, taxes were paid on the money to begin with?

IntlTax · Apr 23, 2009, 05:36 AM

I agree with ATE, the original amount deposited by your mother may have been allowed as a deduction from her taxes and therefore the full amount very well could be taxable to you.

swede1104 · Apr 23, 2009, 07:08 PM

Thank you for your help.

What I know is that my mother had told me at one time that each year when she took a distribution, which she had to take, she paid her Real Estate and School taxes. When I came across her 2001 tax forms and when I filed her 2002 tax forms, her annuity distribution amounts were included as additional income.

I am just concerned that this initial deposit ($32,000.) was a savings account that she deposited into an Individual Retirement Annuity and that we are paying taxes on money that has already been taxed. My mother would often accum. Money in a savings acct. and when money was accum. She would then invest it in a CD, money market accts. etc.

I have requested a Statement of Account from the Insurance co. she had the individual retirement annuity with, hopefully this will shed some light on the situation.

I have filed my Fed. Tax for this year and did pay my money owed.