Shortcut Navigation:

Question for the Money Doctors

Question submitted on Jan 16, 2013.

Question

after 14 years , I received $18,000 from my ex-husband''s annuity I have yet to cash the check, because I don''t know where to invest it, plus I would like to gift part of it to my children what are the tax consequences if I cash this check

Answer

Hi, thank you for the question. I'm afraid there isn't enough information here to answer it though. If the funds you received were from life insurance proceeds, they are most likely not taxable at this time. If they were from a qualified annuity (IRA), then you would need to pay income taxes on the funds if you take them out (as opposed to leaving them in an IRA).

As for gifting some of the funds you your children; you may give up to $14,000 to one person without having to file a gift tax return. Giving more doesn't mean you will pay tax; it just means you have to file the return. Anything under $14,000 to a person is excluded from filing a return (for 2013).

I recommend contacting the insurance company where the annuity was held and ask about the taxation of the proceeds, and then talk to a qualified tax accountant. I hope this helps.


For additional information visit http://www.360financialliteracy.org/