Do I have to pay Pennsylvania taxes on a beneficiary annuity left to me by my mom if I cash it out?

Apr 30, 2018
askacpaicon

My mom left me an annuity. If I cash it out, do I pay state taxes on it? I am 62 years old and live on a retirement income. The cash value is around $52,000, and I make about $24,000 a year during my retirement. It’s a beneficiary annuity.

If the annuity is nonqualified (not a retirement annuity), the earnings portion of the distribution is taxable to Pennsylvania. The amount taxable would be the same as the amount taxable for federal tax. This information would be provided on a 1099R from the annuity company. 
 
If it is a qualified retirement annuity (either stated as retirement annuity or marked as an IRA on the 1099R), then the distribution is not subject to Pennsylvania income tax.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: David S. Markle, CPA, is a CPA financial planner with Markle Wealth Management in Danielsville, Pa.

Pennsylvania CPA Journal

Read the latest from the Pennsylvania CPA Journal online or via the mobile app and digital edition.

Read More

CPA Now

Get the latest info on professional trends, management, and leadership skills on CPA Now.

Read More

Premier Sponsors

Platinum Sponsors

Gallagher Bollinger Logo
CPACharge


Silver Sponsors

Paychex logo
Capstan Logo
epsa USA


Bronze Sponsors

sage-logo_bright_green_rgb_2018_28469
TaxConnex_logo_TM_tagline2019
botkeeper1
Fox School of Business, Temple University


Interested in becoming a sponsor? View packages >