turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Cris
Level 3

Do I have to pay Illinois State Income Tax on an non-spousal inherited annuity?

My cousin passed away in 2021 and I inherited a portion of her annuity (as did my 2 sisters).  I took out the total amount of about $19K in 2023.  The taxable amount was about $9K.  Box 7 on the 1099-R showed "4D".  4 for death and D for annuity payment from non-qualified annuities.  When I select the two codes in TT "4" and "D" it increases my IL State Income Tax.  If I just key in "4" I don't owe IL income tax.  So my two specific questions are (1) Does IL tax inherited non-spousal annuities if they are non-qualified? NOTE: IL does NOT tax IRA, 401IK and Pensions so I was surprised that it appears they tax annuities.  (2) TT asks if this was considered an RMD.  Are there RMDs for non-qualified annuities?  Not sure how to answer the RMD questions that TT asks.  I don't believe I had to take an RMD on this annuity as long as it was fully distributed within 5 year (starting in 2021).  Since I took a total distribution all at one time does it really matter how I answer the TT questions about RMDs? BTW, I have not reached RMD age and will not for several years.

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions
DaveF1006
Expert Alumni

Do I have to pay Illinois State Income Tax on an non-spousal inherited annuity?

Yes, according to the state of Illinois, For beneficiaries that are residents, Section 301(a) of the Illinois Income Tax Act allocates their distributive share of the annuity proceeds to Illinois making them subject to Illinois income tax. So by placing D in Box 7, these distributions are taxable by the Illinois Dept of Revenue. 

 

There is no RMD requirement for inherited non-qualified annuities so you would report that you do not have a RMD requirement.

 

State of Illinois Treatment of Annuities

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

1 Reply
DaveF1006
Expert Alumni

Do I have to pay Illinois State Income Tax on an non-spousal inherited annuity?

Yes, according to the state of Illinois, For beneficiaries that are residents, Section 301(a) of the Illinois Income Tax Act allocates their distributive share of the annuity proceeds to Illinois making them subject to Illinois income tax. So by placing D in Box 7, these distributions are taxable by the Illinois Dept of Revenue. 

 

There is no RMD requirement for inherited non-qualified annuities so you would report that you do not have a RMD requirement.

 

State of Illinois Treatment of Annuities

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies