Do you have to pay inheritance taxes on an annuity?

Answer by  Christian9247 (5042)

No as you are protected as an heir when you inherit an annuity. However the IRS will be waiting if you make any early withdrawals.

Answer by  jalucia (936)

Actually, receiving money from an annuity protects heirs from paying an inheritance tax but they may still be liable for early withdrawal taxes to the IRS.

Answer by  Att4372 (1704)

Unless the estate is very large (3 - 5 million), no inheritance tax is due. An annuity, like an IRA, might have income tax due on deferred earnings. Return of principal is not taxable, but the beneficiary of the annuity owes income tax as income is received.

Answer by  y3636363 (1380)

Yes I believe you do have to pay tax if you inherit something unless it has already been put aside.