Inheritance Tax - United States?

Question

My husband inherited a sizeable amount of money when his aunt died. Can anyone tell me how to handle this come tax time? How much will the federal government and the state of Illinois take? We need to know what to set aside.

In the Spring, he received $10,000 as a gift from his aunt after she died. The remainder of her estate was liquidated and divided up amongst the family. He received a check and his portion of that comes to $37,000.

Answer 1

It depends what type of income it is. If it's life insurance proceeds, it's not taxable (except for any interest earned from date of death to date you received it). If it's from the sale of property (i.e. stock, a personal residence) you use the value on the date of death as the cost. If it was worth $50K & your got $50K nothing is taxable. If there's a gain it's taxable, loss is not deductible because it's personal property. So, it depends on what type of property it is. If it's really sizable you may have to file & pay federal inheritance tax. Best to consult a pro & go over it item by item.

Answer 2

There in no Federal tax on inheritance. The estate paid taxes before you received anything. The same appears to be true for the State of Illinois.

Answer 3

The Federal and Illinois estate tax exemption is 2 million for deaths in 2006 so no taxes under that amount. Any inheritance over that is taxed at 46%.

Answer 4

It depends on several things, like how much and if he nas used any of the credits in the past. I would highly recommend getting an accountant to review your situation. You don't want to end up paying more than you need or less and then getting fined.

Answer 5

Go to: http://www.irs.gov/faqs/faq4-7.html