A relative passed away and her annuity was distributed to the survivors as a lump sum. Tax time is coming up. How do I figure out what I owe on it tax-wise? I know it is considered income but is the whole amount subject to taxation? As you can tell, I don’t know the first thing about this topic, so go really SLOW!
Is there anything I can do to minimize what I owe?
Inherited Annuity Payout and US Income Tax?
21
Mar
Steve
March 21, 2010 at 7:33 am
The amount of the annuity on the date you inherited it is not subject to tax. However, any interest earned would be subject to tax as ordinary income.
v b
March 21, 2010 at 8:27 am
IF the annuity was tax deferred (meaning the relative never paid income tax on it while they were alive), then YES, you get to pay the taxes. (The other post was talking about after-tax money from an estate. This is pre-tax money.)
The beneficiaries should receive a 1099-R showing the taxable amount. You put that on the tax return.
(If it’s an IRA, it’s often all taxable. If it’s anything else, it may be partially taxable.)
Nate
March 21, 2010 at 8:46 am
wow taking money from the dead sick sob