Inheritance Taxes

[Bayridge78759]

Acquired an inheritance during 2018 and I got two Forms (1099-R's).

One has a distribution code of 4D (Annuity Payments from nonqualified annuities). Total Distribution

  - Taxes were taken out and federal income tax withheld

One has a distribution code of 4 (Death). Total Distribution.

  - No taxes taken out and no federal income tax withheld. 

It's my understanding that there is no inheritance taxes. I have entered the information on my tax return but it looks like it's penalizing me and I''m having to pay taxes on these two distributions.

[NCperson]

there is no inheritance tax on ASSETS., but if there is INCOME thrown off by those assets, then taxes are to be paid on that.  Either the estate or the beneficiaries have to pay taxes on that income.  

Presumably you received these annuity payments, right? 

[Bayridge78759]

Yes. I received these two annuity payments.

[NCperson]

unfortunately, you are responsible for any associated taxes on this income.

I would also suggest checking with the executor ./ administrator of the estate.  You may be receiving a 'Final K-1' which may contain more income.. It may also contain payments made by the estate for taxes due that you can take a credit for on your returns.  It really depends on the situation of the estate and inheritance.  

[Bayridge78759]

Thank you for the information. Appreciate the advise.

[MELISSA_NENTWICK]

along the same lines, we received 1099-R

live in the state of PA

no local/state taxes with held

doing the STATE portion of the return

which PA distribution type do i select from the Gross Compensation worksheet..

there doesnt appear to be a selection for inheritance & none of the other selections apply

thank you