Ask Experts Questions for FREE Help !
    tanyav72's Avatar
    tanyav72 Posts: 2, Reputation: 1
    New Member

    Mar 6, 2007, 07:02 PM
    Taxes on an inherited annuity
    My father passed away in 2005 and bequeathed his annuity to me and my sister. The funds (approximately $16,000 each) were distributed in 2006 and his estate paid the Federal and Colorado State taxes on it before my sister and I received our share. Because I deposited the entire amount into the bank, my bank reported the amount to the IRS. I need to know if I have to pay additional taxes (Federal and Hawaii State) on this. I'm thinking I may not have to, but I don't want to NOT pay it and then get in trouble for it later.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert

    Mar 8, 2007, 12:09 PM
    It depends on the structure of the annuity.

    It is likely the annuity was funded with after-tax money. In that case, the initial money used to buy the annuity is tax-free. However, the money that was earned within the annuity grew on a tax-deferred basis, which means it is subject to income taxes when it is withdrawn.

    Go get professional tax help on this. The tax pro will need to review the anuuity itself to determine what is taxable and what is tax-free.
    tanyav72's Avatar
    tanyav72 Posts: 2, Reputation: 1
    New Member

    Mar 8, 2007, 03:26 PM
    I'm sorry, I didn't mention that the 1009 is not under my name, it's made out to my father's estate. All of the paperwork was sent to the executor when he took care of the taxes and settling all of my father's affairs. I only received a copy of the 1099, but since my name is not on it, I was wondering how I would claim it. Does this make a difference on whether or not I need to include the amount in my income tax?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert

    Mar 10, 2007, 01:53 AM
    You do NOT claim it. The estateneeds to file a fiduciary return (Form 1041) to pay the taxes on the annuity distribution.

Not your question? Ask your question View similar questions


Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.

Check out some similar questions!

Property taxes on inherited property [ 1 Answers ]

When daughter inherits home from parent and moves into the home, is there an adjustment to the property tax base in California? Currently taxes are extremely low but house has increased in value since purchase 40 years ago. House is held by trust.

Taxes on inherited property [ 4 Answers ]

I inherited property from step mother who had life estate of property which belonged to my father. My brother had already past away but had two daughters so I received 1/2 and they 1/4 each. Do I have to figure taxes on my half? Do I have to pay taxes on it or report it on my taxes? Thanks for your...

Inherited Property Being Sold- Taxes? [ 1 Answers ]

My father died and left property in trust for my mother, my brother and I. (40 years ago.) My mother dies in 1989, and the property transferred to my brother and I. The trust was dissolved in 1994. I have paid taxes on this property continuously. The property value has increased 10x. It...

Paying taxes on inherited annuity [ 1 Answers ]

My brother and I were beneficiary of an annuity. I understand we pay taxes on the taxable amount listed in box 2a of the 1099. My question is... do I treat this as income adding it to myearned income and possibly raising my tax bracket, or do I pay taxes based on the earned income bracket? ...

Taxes on inherited property sold [ 0 Answers ]

My siblings and I inherited our parents house after their death. It was in poor condition. We had it appraised for $132,000 and sold it for $125,000. Do we owe any federal income tax on it? All I have read so far indicates that we do not. But, how to we file, since the mortgage company that...

View more questions Search