I received a letter from an attorney about an advanced payment on a non-qualified annuity in an estate. This annuity has 3 beneficiaries and they want to send me a check for $33,000.00. Attorney said they would issue a K1 next year. I am unfamiliar with a K1 and am trying to see how this changes my AGI. I have added the $33,000 to my gross and it will push me up another bracket. I am not sure if this is correct since the $33,000 is actually less than 1/3 of the total account balance and is more than 1/3 of what I should get after they paid the inheritance tax. Also since it is non qualified the tax is on the gain only as far as I know based on another annuity I received but it did not go through an estate. In testing with $33,000 added to gross I move to the next bracket a good way and then this amount will leave only $100.00 left from the standard deduction + senior deduction. It will also reduce the $6,000.00 bonus for 2025. I have very stable income so I estimated for next year, which will be a lower gross and much lower tax for me. I just don’t know if I am supposed to use the total or the taxable to add to the gross to make the comparison. I am thinking I should tell them not to give it to me until next year.
Thanks for any help on this matter.
