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GMan9
New Member

Annuity inheritance

My Aunt passed away and did not assign beneficiary for her two annuity accounts.   As the executor per her Will, the Annuity company gave me the death benefit from the two annuity accounts and issued me the 1099R.  However,  per her Will, all of her reminder assets are to be distributed equally between myself and my two siblings.   Is there any where I can indicate in Turbo Tax the amount that needs to be adjusted so that the annuity death benefit are not all counted as my income since I have only received 1/3 of it and should not be taxed for the whole amount.

 

Plesae help.

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1 Best answer

Accepted Solutions
dmertz
Level 15

Annuity inheritance

The payment and Form 1099-R should have been issued to your Aunt's estate, not to you, and is reportable on an estate income tax return, Form 1041.  The estate can then pass the income through to the estate beneficiaries as Distributable Net Income on Schedules K-1 (Form 1041). 

 

If the money was (inappropriately) paid to you and the annuity company will not correct the Form 1099-R to show that you received no distribution and issue a Form 1099-R to the estate, you'll need to nominee the income to the estate (not to your siblings) using the process that fanfare indicated.  You'll then deposit the funds into the estate account, apply it to any unpaid estate expenses, the distribute the rest to the estate beneficiaries.

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2 Replies

Annuity inheritance

Nominee/middleman returns. Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts allocable to each. You must also furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 with the Internal Revenue Service Center for your area. On each new Form 1099, list yourself as the “payer” and the other owner as the “recipient.” On Form 1096, list yourself as the “Filer.”

 

In the case of a 1099-R, unless TurboTax offers a box for the nominee amount to be excluded,

on your own return you would have to make an "Other income" entry of  minus 2/3s of box 1

to cancel 2/3s of the amount on Line 5

 

@GMan9 

dmertz
Level 15

Annuity inheritance

The payment and Form 1099-R should have been issued to your Aunt's estate, not to you, and is reportable on an estate income tax return, Form 1041.  The estate can then pass the income through to the estate beneficiaries as Distributable Net Income on Schedules K-1 (Form 1041). 

 

If the money was (inappropriately) paid to you and the annuity company will not correct the Form 1099-R to show that you received no distribution and issue a Form 1099-R to the estate, you'll need to nominee the income to the estate (not to your siblings) using the process that fanfare indicated.  You'll then deposit the funds into the estate account, apply it to any unpaid estate expenses, the distribute the rest to the estate beneficiaries.

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