My father passed away last year and his management pension fund sent me a disbursement of his retirement account. I received a 1099-R for that amount and it says in box 2a that it is taxable. I thought it would be considered an inheritance and non-taxable. Do I have to claim it on my tax return?
Yes, you will need to claim the disbursement of your father's retirement account reported to you on Form 1099-R.
Generally, as a beneficiary, you report the pension or annuity income in the same way your father would have reported it on his tax return.
You aren't actually paying tax for "inheriting" the retirement account itself, but on the actual disbursement of the funds. Taxes are not paid by you on the inherited retirement account until the money is actually disbursed to you. So for example, if you inherited the retirement account in 2017 but the money was not disbursed to you until 2020, you would pay tax on that amount in 2020, but would not pay taxes in 2017 or any of the years in between.
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