If I inherited an annuity in & received a form OMB 1545-0119 with an amount in box 1 “gross distribution” & another in box 2 “Taxable amount” what r the tax implications?

[Critter]

You got a FORM 1099-R and  of the box 1 gross distribution the amount in box 2 is what you will be taxed on if there is a number in that box ... otherwise the box 1 will be the taxable portion.

[mrfkl]

Thank you. But I understood that because it was an inheritance, that there would not be taxes on it.  I inherited this annuity in 2018 and there was a lump sum distribution to the heirs. Are you sure the heirs need to pay taxes on the box 2 amount even in cases where it is considered an inheritance?

[macuser_22]

Inherited cash is not taxable but tax deferred retirement accounts are.

Yes the box 2a is taxable to the beneficiaries.

[mrfkl]

Thank you.  Understood. But this was not a retirement account as far as we knew. It was a life insurance annuity from New York Life Insurance and Annuity Corp. Do we have any options if there is an amount in Box 2a of the 1099R?  For example is there a way for the estate to pay tax on that amount, rather than the heirs?

[macuser_22]

If the estate was the named benificuary then you would not have received the 1099-R - the estate would.

The named benificuary is responsible for the tax on a 1099-R that reports Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.  The taxable amount must be paid to whoever receives the 1099-R and the money.

[mrfkl]

Thank you!

[Critter]

The rule goes ... if the annuity payout would have been taxable to the decedent then it is taxable to the heirs/beneficiary.   If the estate received the payout they can either pay the taxes at an extremely high rate or pass thru the income to the beneficiaries to pay at their tax rate.  So everything depends on who the check was sent to ... talk the the estate's trustee if this is who was paid.

[wetogether]

The OMB 1545-0119 is a Statement of Survivor Annuity Paid.  The Gross distribution is 32052.00 and the taxable amount is unknown.  765.60 was withheld for federal taxes.  It was paid by the Office of Personnel Management, Retirement Operations, PO Box 45, Boyer, PA [social security number removed].  I don't see were to enter this on the income tax form.

[Critter]

OPM sends out a form 1099-R  not a  OMB 1545-0119  ...   

Enter a 1099-R  here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu  (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type:  Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[Critter]