Do you claim inheritance on income taxes?
Feb.06, 2010 in
inheritance taxes
If you inherite money, after the estate taxes are paid, do you have to claim income on the balance that you get? What about in NJ?
The answer is no. The estate taxes are taxes on the money in the estate and it is taxed at the time of the disbursement of the estate. If you inherit things like stocks and bonds, your new basis in them will be the value on the day you inherited them in case you sell them. The inheritance tax is only going to come into effect on estates over a certain size, so unless the estate is over that number there will be no taxes. The executor of the estate should supply you will any information that you need.
February 6th, 2010 at 12:44 pm
call H&R block..they know everything
800-829-4477
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February 6th, 2010 at 12:53 pm
This is the sort of question you should take to a tax lawyer, or at the very least you should pay the forty or fifty bucks to get some tax software (Turbo Tax, Tax Cut, etc.) when you do your return.
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February 6th, 2010 at 1:37 pm
No, you don’t show inheritances on your federal tax return. But if for example you put the money in the bank and earn interest on it, you would report and pay taxes on that interest income.
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February 6th, 2010 at 2:23 pm
Judy is right. You are only going to be taxed on income earned after the date of death. Ask the executor if you are going to get a K-1.
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February 6th, 2010 at 3:06 pm
The answer is no. The estate taxes are taxes on the money in the estate and it is taxed at the time of the disbursement of the estate. If you inherit things like stocks and bonds, your new basis in them will be the value on the day you inherited them in case you sell them. The inheritance tax is only going to come into effect on estates over a certain size, so unless the estate is over that number there will be no taxes. The executor of the estate should supply you will any information that you need.
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February 6th, 2010 at 3:39 pm
No, you do not have to claim the income that you receive from your inheritance. You do not have to put it on your tax return as income received either. After the estate taxes are paid and you are handed a check for your disbursement, that is free and clear of any taxes–it is your money.
But, if you inherit stocks or bonds that is totally different situation because you will receive a 1099 and one will be sent to the IRS as well that shows the amount of your inherited stocks. In that case, you will only be taxed on the stock value from the date of death to the day that you sold them, and will only pay taxes on the amount where there was a gain-thus a capital gains tax. That does not sound like what you are dealing with though–just a straight cash inheritance, right?
We have been through this same thing last year when we inherited money and stocks and we actually called an IRS agent and she gave us a lot of great info and help-including what I just told you.
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February 6th, 2010 at 3:50 pm
No, inheritance by you is not taxable to you. The only things that could be taxable would be if you inherited a pension, or an ira. Otherwise, what you inherit is not taxable. No if you received money or stock then the income you earn after receiving the inheritance is taxable, but not the inheritance itself.
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