Notices

Quick Tax ????

Old 04-11-2011, 01:41 PM
  #1  
Senior Member
Thread Starter
 
Join Date: Nov 2006
Location:
Posts: 248
Default Quick Tax ????

My Dad Passed Aug, 2010.. Left My Brother And Me. A Annuity Worth 120K We Split... 61K Each...

Tax Time... My Accountant Figure I Owe Taxes On The 61K... My Brothers Tax Lady Said He Doesnt... Said It Was A Inheritance.......

Cant Seen To Find The Awswers... My Tax Bill Was 14K ....... He Got 3K Back.....

Can Anyone Point Me To The Tax Rule That Explains This !!!!!!

Line 15a Is Where She Changed The Numbers.

Thanks
Jeff
neu-rich is offline  
Old 04-11-2011, 02:51 PM
  #2  
Admirals ClubCaptains Club Member Admiral's Club Member
 
Join Date: Oct 2002
Location: anderson, sc
Posts: 18,513
Default

Somebody is WRONG

Depends on if it was a qualified annuity or not, if a qualified then it can not be rolled over and is taxed to the beneficiary at his rate (a spouse can roll it over)

Without all the details I am betting yours it correct

Was this some type of retirement fund of his
tprice is offline  
Old 04-11-2011, 03:14 PM
  #3  
Senior Member
 
Join Date: Mar 2010
Location: Long Island, NY
Posts: 237
Default

Withhout knowing all the details ... more likely than not the anniuity would be taxable to the recipient.
Joe Belletti is offline  
Old 04-11-2011, 06:39 PM
  #4  
Senior Member
 
Join Date: Sep 2010
Location: Between Buzzards Bay and Narragansett Bay
Posts: 1,283
Default

Is your accountant a CPA, EA, or Tax Attorney and your brother's accountant someone who doesn't hold such credentials or vice/versa? Over the years, I've seen many errors made on tax returns mostly by "accountants" who, in my opinion, were not really accountants. Instead, they were simply people who did taxes and had little or no formal training. Usually, a CPA, EA, or tax attorney will do it right. Believe it or not, until now, anyone could say they were a tax accountant. Luckily, IRS is finally addressing this issue.
auntiepaula is offline  
Old 04-11-2011, 06:57 PM
  #5  
Senior MemberCaptains Club Member
 
Join Date: Aug 2006
Location: Central Florida
Posts: 8,223
Default

Did you receive a 1099-R from the insurance company? You should have.

If it was held outside an IRA, you would be taxed on the difference between what your dad put into the annuity and what it was worth when it was paid to you. If it was held inside an IRA, the entire amount is most likely taxable, unless there were non-deductible contributions made.
Sprockets is online now  
Old 04-11-2011, 07:10 PM
  #6  
Senior Member
 
Join Date: Jun 2010
Location: The left coast.
Posts: 1,881
Default

I have an annuity that my son will inherit. As I understand, my son can take it over and keep receiving the monthly income or cash it out as a lump sum.

Wasn't there a one time non taxable no limit gift for 2010? I remember my GF saying something about that concerning her parents money that was gifted to them.
the good life is offline  
Old 04-11-2011, 07:14 PM
  #7  
Admirals ClubCaptains Club Member Admiral's Club Member
 
Join Date: Oct 2002
Location: anderson, sc
Posts: 18,513
Default

Originally Posted by the good life View Post
I have an annuity that my son will inherit. As I understand, my son can take it over and keep receiving the monthly income or cash it out as a lump sum.

Yes it can be taken in monthly payments according to the RMD charts instead of lump sum
tprice is offline  
Old 04-11-2011, 07:15 PM
  #8  
Admirals ClubCaptains Club Member Admiral's Club Member
 
Join Date: Oct 2002
Location: anderson, sc
Posts: 18,513
Default

Originally Posted by Sprockets View Post
Did you receive a 1099-R from the insurance company? You should have.

If it was held outside an IRA, you would be taxed on the difference between what your dad put into the annuity and what it was worth when it was paid to you. If it was held inside an IRA, the entire amount is most likely taxable, unless there were non-deductible contributions made.
Meant to add that, very important fact.

DAMN I AM TIRED AT THIS POINT, ONE MORE WEEK TO GO
tprice is offline  
Old 04-12-2011, 05:49 AM
  #9  
Senior Member
Thread Starter
 
Join Date: Nov 2006
Location:
Posts: 248
Default

Thanks For The Help... My Dad Passed @ 62 Years Old... He Set This Up 18 Months Before He Passed... The Way I Remember He Rolled His IRA's Into This Annuity.. In The Forms He Sign It States That Its A "Single Premium" That Leads Me To Believe Its A Insurance Policy ???

Jeff
neu-rich is offline  
Old 04-12-2011, 06:03 AM
  #10  
Senior MemberCaptains Club Member
 
Join Date: Aug 2006
Location: Central Florida
Posts: 8,223
Default

Originally Posted by neu-rich View Post
Thanks For The Help... My Dad Passed @ 62 Years Old... He Set This Up 18 Months Before He Passed... The Way I Remember He Rolled His IRA's Into This Annuity.. In The Forms He Sign It States That Its A "Single Premium" That Leads Me To Believe Its A Insurance Policy ???

Jeff
You used the word "rolled" when describing the transfer of the IRA into the annuity. You need to determine whether this was indeed a qualified rollover, which would tell me that it was still in an IRA when distributed to you. If it was a taxable distribution from the IRA, which was subsequently invested in the annuity, the situation is different.

At this point it may not matter if the annuity has already been distributed. What paper work did you receive from the insurance company?
Sprockets is online now  
Old 04-12-2011, 06:40 AM
  #11  
Senior Member
Thread Starter
 
Join Date: Nov 2006
Location:
Posts: 248
Default

Got A 1099-R For 61K Line 7 = Distribution Code 4 And They Checked The Box IRA/SEP/SIMPLE ....

Jeff
neu-rich is offline  
Old 04-12-2011, 07:03 AM
  #12  
Senior MemberCaptains Club MemberPLEDGER
 
Join Date: Sep 2003
Location: Lancaster , RIC VA
Posts: 8,350
Default

Looks fully taxable to me, but there are more questions that should have been asked. Any basis in the IRA? Had your father begun taking distributions. Probably does not matter since you already received full proceeds.

Look here:

http://www.irs.gov/publications/p590...link1000230753


I'm going to bet that your brother gets an inquiry from the IRS.

What is the "taxable amount" on the 1099?
GWcpa is offline  
Old 04-12-2011, 07:11 AM
  #13  
Senior Member
Thread Starter
 
Join Date: Nov 2006
Location:
Posts: 248
Default

Damn This Sure Is Confussing...... Just Want To Make Sure Its Done Right..... I Dont Mind The Tax As Long As Its Correct...

Jeff
neu-rich is offline  
Old 04-12-2011, 10:01 AM
  #14  
Senior Member
Thread Starter
 
Join Date: Nov 2006
Location:
Posts: 248
Default

[
What is the "taxable amount" on the 1099?[/quote]


Box 2b Is Check.. "Taxable Amount Not Determined"

Jeff
neu-rich is offline  
Old 04-12-2011, 02:40 PM
  #15  
Senior MemberCaptains Club Member
 
Join Date: Aug 2007
Location: Pinellas, Fla
Posts: 794
Default

Unless Pops ever made non deductible IRA contributions and you can find a form 8606 in his tax returns, I'm with GWcpa, fully taxable and your brother will get a love letter from the IRS sometime in the future.

"Taxable Amount Not Determined" is the insurance company not wanting to give income tax advice and covering their butt!
mahi231 is offline  
Old 04-12-2011, 05:57 PM
  #16  
Admirals ClubCaptains Club Member Admiral's Club Member
 
Join Date: Oct 2002
Location: anderson, sc
Posts: 18,513
Default

Originally Posted by mahi231 View Post
Unless Pops ever made non deductible IRA contributions and you can find a form 8606 in his tax returns, I'm with GWcpa, fully taxable and your brother will get a love letter from the IRS sometime in the future.

"Taxable Amount Not Determined" is the insurance company not wanting to give income tax advice and covering their butt!

YEP, bout next Jan-March.

He needs to go ahead and amend his ASAP
tprice is offline  
Old 04-14-2011, 06:12 AM
  #17  
Senior MemberCaptains Club MemberPLEDGER
 
Join Date: Sep 2002
Location: Lander, Wyoming USA
Posts: 2,291
Default

I agree with the rest of the folks who are saying it's taxable. Most "annuities" are taxable to some extent. If your dad "rolled over" an IRA into an annuity to start receiving regular payments, then probably most, if not all, the money is taxable. Had a client one time who rolled her variable annuities a couple of time before dying. Paid a lot of money up front but the company who had the annuity used the value of the annuity as the basis upon payout to her children and underreported the income. Fortunately,I was working for her when she bought them and when she died so at least one person, besides her, knew the answer.
JALICHTY is offline  
Old 04-14-2011, 04:11 PM
  #18  
Senior MemberCaptains Club MemberPLEDGER
 
Join Date: Aug 2001
Location: West Carolina
Posts: 21,925
Default

Did he list you as a beneficiary on the annuity or did it just fall into the estate? If you and your brothers were beneficiaries you could opt to take the RMD based on your life expectancy.
Shag is offline  
Old 04-15-2011, 03:42 AM
  #19  
Senior MemberCaptains Club Member
 
Join Date: Aug 2006
Location: Central Florida
Posts: 8,223
Default

Originally Posted by Shag View Post
Did he list you as a beneficiary on the annuity or did it just fall into the estate? If you and your brothers were beneficiaries you could opt to take the RMD based on your life expectancy.
Hey Shag. Unfortunately it appears there was no planning done at the time. Unless the beneficiaries really needed the money, there were some better options than taking the cash.
Sprockets is online now  
Old 04-15-2011, 11:18 AM
  #20  
Senior Member
Thread Starter
 
Join Date: Nov 2006
Location:
Posts: 248
Default

Was All In A Trust.. brother And I Were The Beneficiaries.......
neu-rich is offline  

Thread Tools
Search this Thread