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I just inherited an annuity from my deceased mother. How do…

I just inherited an...

I just inherited an annuity from my deceased mother. How do I cash out and donate funds to my adult son with neither us of paying additional federal or state taxes?

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Answered in 5 minutes by:
3/14/2018
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,610
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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You will be taxed on the annuity the same way your mother would have been taxed had she cashed it out. Giving the money to another individual does not lessen your tax but you son would not be taxed on the amount you give him.

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Customer reply replied 1 month ago
would I be taxed on the full amount of the annuity?
Customer reply replied 1 month ago
would I be taxed on the full amount of the annuity?

You would be taxed on the earnings. An annuity is normally purchased with taxed money (outside a pension plan). When the amounts are taken out some is tax free and some is taxed. The 1099R sent tells you how much is which.

Please let me know if you need more information.
If not then please scroll up to see the STARS to rate so I am credited.

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Customer reply replied 1 month ago
How do I know how much is taxed before I withdraw funds?

You could ask the administrator of the annuity.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,610
Experience: 15years with H & R Block. Divisional leader, Instructor
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I hope this has been useful

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Customer reply replied 1 month ago
I don't suppose I can "donate" the annuity to my son and let him deal with the taxes? He's in a much lower tax bracket.

You cannot donate to him no.

You would need to check with an estate attorney in your state. When you relinquish property, you usually don't get any say in who inherits in your place. If you want to control who gets the inheritance, you must accept it and give it to that person. If you relinquish the property and the deceased didn't name a back-up heir, the court will apply state law to decide who inherits.

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