If You Inherit An Annuity From A Parent, How Are You Taxed On This? Is It Tacked On To Your Income For That Year?


2 Answers

Daniel Tagliento Profile
Lucky you, money for nothing...& the rents for free, too! Get yourself to the accountant or lawyer or both who set this "Manna from Heaven" deal together for the accurate answer. Or at least contact the IRS, who will know how much they would like to have of it all! One should be guided by the principal that, one should not live on one's capital but by the interest alone! Here! Here!
Do remember with fondness that person, who had elements it....the where with all, the bucks!
Shinypate one Profile
Shinypate one answered

Typically, the annuity is considered income in receipt of a decedent, or IRD. IRD is the income element of inherited property. For example, if you receive an IRA as a beneficiary, it is income to you as it would have been income to the decedent.

In a traditional annuity, an investor turns over a sum of money, usually to an insurance company, that agrees to pay the investor a certain amount of money over a period of time. Some annuities begin immediately and some are deferred until some future event, such as the beneficiary reaching a certain age. Whether it is an immediate or deferred annuity, each part of the payment represents a return of the original investment, plus the earnings on the investment. The earnings are taxable over the life of the payments.

To reduce the taxes, you can take substantially equal annuitized payments over your lifetime. To increase the taxes, receive it all as a lump sum.

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