A wonderful mix of answers that have thoroughly mixed the estate and gift tax with the income tax question. Spicertax is right on the money. The inheritance you receive will not be subject to income tax unless it would have been income to the decedent. This includes some retirement accounts, annuity accounts and inherited installment sales. If you simply receive cash from the estate it is not income and is not reported on your income tax return.
2006-09-20 12:17:22
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answer #1
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answered by Anonymous
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All of the above answers are wrong. You don't "income tax" on an inheritance, however if the deceased estate is large (over $2 million) for deaths after 1/1/06, then there might be an inheritance tax on the estate. The inheritance tax will be paid by the administrator/exectuor/executrix of the estate before any distributions are made to the beneficiaries.
Since you inherited $50,000 directly from a life insurance policy there is no tax to you. However, refer to the 1st paragraph....if your mother's estate was over $2,000,000 then there might be some inhertance tax, but that is paid by the estate, not you.
One exception to the "no income tax" rule for inheritances; YOu will pay income taxes on an inherited IRA when you make a withdrawal. THis is because the deceased did not pay income taxes on the IRA fund (this assumes a regular IRA, a Roth IRA is still no income tax)
A CPA since 1975
2006-09-23 15:05:37
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answer #2
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answered by LTCPA 2
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NO, the inheritance tax (Form 706) is paid by the estate not by the person that receives the funds from the estate. For example, Grampa dies with $8,000,000 and leaves everything to is grandson. Once the estate tax is paid (if any), the balance is paid over to the grandson.
There is an estate tax exemption of $2,000,000 in 2006, thus if your net worth (all your assets less what you owe) is less then this then you have no FEDERAL taxable estate (assuming you have not made exempt gifts in your lifetime). There may be an estate tax due by the state you live in and the state you own property in.
There is also an annual gift tax exclusion of $12,000 per year. Thus Grandma can give away $12,000 every year to each of her grandchildren and there will be no gift tax return required nor gift tax.
IF YOU HAVE CONCERNS: See a CPA/Tax Advisor
2006-09-20 07:47:23
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answer #3
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answered by dillon Y 3
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No you do not pay income tax on inheritances regardless of amount - except for inherited IRA accounts and you may get a K-1 from the executor for any small income earned on the inheritance during probate. All of the other answers are wrong. They are confusing you with estate and gift tax rules that do not apply to your question about income tax.
2006-09-20 08:11:16
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answer #4
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answered by spicertax 5
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There is no Federal tax on an inheritance. Federal Estate tax would not apply if the entire estate is under $50,000. Some states have inheritance taxes, but we need to know which state to comment on state taxes.
2006-09-20 13:02:13
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answer #5
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answered by STEVEN F 7
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It's best if the person gift their estate prior to their death.
Recent changes in tax code raised the ceiling and lowered tax rates when the estate is worth less then 10 million. This was done in order to protect family farms from losing their livelihood, as land is considered estate, and families often have to sell the
land in order to pay the death tax.
It is criminal what has happened to this country since the inception of the Income Tax in 1913..
wtih 50,000 you are likely in a 28% bracket.. Your best bet is to talk to an estate attorney and see what can be done to protect you from uncle sam..
Citizen's Against Government Waste
http://www.cagw.org
Restore Original Intent:
http://www.cafepress.com/originalintent/
Eliminate the IRS and implement a fair Tax
http://www.fairtax.org
Vote Libertarian
http://www.lp.org
2006-09-20 07:32:05
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answer #6
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answered by Anonymous
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Actually, no, the estate pays the tax if it exceeds the exemptions, not the person receiving the money. So if you receive 50,000, the estate has already paid all the taxes, and you do not have to report it as income or pay any income tax on it.
2006-09-20 07:46:49
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answer #7
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answered by sjoschko 3
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You are well within the exemption for estate tax purposes. The estate has to be valued over a couple of million dollars to trigger death taxes.
2006-09-20 07:32:49
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answer #8
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answered by Mike L 2
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If your brothers estate comes to over £275k including money and assets. You will be taxed 40% of anything over. They will send you a bill. If you cannot raise this money between you then you will have to sell one of the properties.
2016-03-26 23:13:04
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answer #9
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answered by Anonymous
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yes, although there is a small eception of you family being allowed to gift to you up to 10,000 dollars of money /merchendise per year before their death that is not taxable. Ie, you can have mom put your name on the back of an antique dresser you have always wanted as a gift and get it later. Sounds morbid, but it is a way around the system
2006-09-20 07:29:05
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answer #10
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answered by marlee6996 2
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