Received 1099-R due to deceased parent, is it taxable for state taxes

reading all these posts, I see that the 1099-R received after a parent's death or as an inheritance is federally taxable...but when I go to do the state taxes, that same amount automatically appears as retirement income on my state taxes and I'm taxed taxed on it there too. Is that supposed to happen? I thought that it was not taxable at the state level since it's paid at the federal level. I live in Illinois.

763

Expert Alumni

Apr 14, 2025 4:34:29 PM

It is not taxed as an inheritance. It is taxed as a distribution from a retirement account. Distributions from retirement accounts (other than Roth accounts) are considered taxable income. It is included in your federal taxable income and in most circumstances your state taxable income. So yes, that is supposed to happen. Many states don't tax certain forms of retirement income, but you have to be over a certain age and inherited IRAs often aren't included in that.

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Received 1099-R due to deceased parent, is it taxable for state taxes