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RayAnswers, Attorney
Category: Estate Law
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Experience:  Texas lawyer for 30 years in Estate law
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my mom received annuities when her mom died as inheritance.

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my mom received annuities when her mom died as inheritance. How will this affect her taxes for 2014?

Thanks for your question and good evening.The annuities are taxable to you just as they were to the deceased person, your mother.This pays to you as a named beneficiary.Here is reference to the taxes that occur on inherited annuities.

You mother the original investor with an annuity 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 from the annuity are taxable over the life of the payments.

There should not be any state inheritance/estate taxes and here are the federal limits on inheritance for 2013..

http://www.ohioinsureplan.com/planning/estate-tax/

http://www.annuitybasics.com/inherited-annuity-help-or-hurt


I would contact your tax preparer here now.It may be possible to defer some of the taxes depending on the annuity.Overall you are going to owe taxes on this and you need the tax preparer to look at your previous taxes and income to see where this is going to put you tax bracket wise.This is the only way to avoid an ugly suprsie come the end of 2014.

I appreciate the chance to assist you tonight.Please let me knwo if you have more follow up.Thanks again.

RayAnswers and 5 other Estate Law Specialists are ready to help you

And let me clarify that the federal estate tax exemption is $5,250,000 so no estate taxes unless it is over this amount as far as total value of the estate.

Likely the only taxes that are going to be due are the income taxes to your mother as income from these annuities when she receive payments and that can affect her tax bracket for sure.I would suggest that she talk to her tax preparer about how much she will owe based on prior years and whether you can postpone/defer if necessary any of the income.

 

There will be income taxes due on any income paid to here by the annuities in 2014 and it is based on her tax bracket as to the amount owed.



Thank again.

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