My widowed father passed in November of 2023. I have since received a 1099-R from an annuity company along with a distribution of the value of the annuity that he had. The 1099-R is in my name and looks to be treating this as income and taxable to me. The value of the annuity is well below the federal taxable limit as well as state taxable limits.
How do I handle this in TurboTax as an inheritance and tax free to me?
Thanks
Hi,
my mom passed away and I've received a CALSTRs1099-R identifying the amount and noting the federal taxes were withheld. Like you I had thought inheritances to be tax free. On the California State Teachers Retirement system, I found a FAQ which clarified that the death benefit is taxable income. The annuity which was transferred to me is taxable income and they sent me a 1099-R also.
The entire gross amount ins considered to be income in the sense that the distribution is reportable on your tax return, but only the amount in box 2a of the Form 1099-R is taxable income to you that is includible on Form 1040 line 5b.
Thanks to both of you for replying. It makes a little more since now. Since part of the total distribution is made up of “after tax funds” and part is “before tax funds” , I can understand, somebody has to pay the piper.
But it does get confusing when Turbotax goes into the questions about “Was this Person born before 1950 and is this an RMD”, etc.