Beneficiary Tax on Annuity in pennsylvania

Forum|Forum|10 months ago
May 26, 2025
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XAM330Author

I am to receive an annuity from my father’s death that lived in Pennsylvania.

They will pay it to me and send a 1099-R per their documents.

I do not live in Pennsylvania and my state Ca does not have inheritance tax.

My question is. Do I have to pay inheritance tax to Pa on this money and will I also have to pay Ca tax since it will be on a 1099-R as income, or will it be excluded somehow from when it is input in turbo tax.

Also if I have to pay inheritance tax to Pa do I have to File a Pa state return? I will assume that if so; since I do not live in Pa I would not have to pay Income tax there, just the inheritance tax?

JotikaT2

For the inheritance on an annuity from PA, you will need to file an inheritance tax return in PA. PA imposes a tax of 4.5% on transfers to direct descendants and lineal heirs per this link.

The income will be reported in PA on Form REV-1500 and more specifically on Schedule G. Please see this FAQ from Pennsylvania for more information on the inheritance tax.

On your resident CA return, you will need to report the proceeds when you receive your 1099-R. While it seems like you are paying tax twice on the same income, that is actually not the situation here as an inheritance tax is not considered an income tax. Therefore, you would not receive a credit on your California resident income tax return for the 1099-R income.

And you are not subject to PA nonresident state income taxes as you do not reside in PA. Therefore, you would not need to file a nonresident return in PA for the annuity income. That will only be reported on your California resident income tax return as well as on your federal income tax return.

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