Death and Taxes... How do I seperate my inheritence from estate?

Question

My mother passed away several months ago and tax season is looming. My brother and I received 6k each from her benificiary disability thing, there was car life insurance that paid on the car with another 1k to pay back from the time she was disabled, we've also gotten the pension worth 12k. We're waiting on the 401k, a group life insurance of 42k, 8k of which is going to the funeral home, and a individual life insurance of 36k which will go through her sister to us.

My question is, how do I figure out what I should file for my own taxes and for my late mother's taxes. o_O All the money has been switching hands between us and being paid for this or that, and trying to get all this paperwork done. What is taxable? What's not? Are we being really stupid? Do I really really have to go hire a dang professional? :P

Thanks

Answer 1

For your mother her final 1040 will report all income to her date of death. After her death if there is no probate then no Form 1041 is required. For your taxes you will receive 1099 forms in January showing what is taxable. Use those to do your taxes or take it to a professional if you get confused.

Answer 2

Inheritance taxes are only an issue if the total estate (not including any life insurance and trusts) is more than 1 or 2 million dollars. So the money you and your sibling received is not reported by you personally and not taxable.

Go to a tax professional to do your mother's taxes, most of the items listed are not considered taxable so no big worries there.

Call down and go see a qualified CPA.

I'm sorry for your loss.

Answer 3

I assume that when you say seperate your inheritance from the estate you are talking about what yo have to do to probate your mother's estate and what will be taxable to you.
You can go to the courthouse in the county where your mother lived and check with the register of wills. They will help you do what is needed for the probate of her will and assets. The life insurance and the pension and te 401K are not subject to probate. You probably don't need a "dang" professional for an estate that is this small.
The retirement account and the 401K will be taxable to you when you receive the funds. There is no 10% early withdrawal penalty because the amiunts are being paid to you by reason of your mother's death. If you wait until January of 2007 to take the pension and the 401K, as lump sums, you can roll them over to a decedent IRA and take distributions over yor lifetime, again without penalty. If you take them tis year you will not be able to rollover to an IRA and the amounts will be taxable all at once.
The life insurance and what I assume is a disability life insurance along with the car life insurance is not taxable to you.
Don't take my word for it though I am just a Dang professional.

Answer 4

"which will go through her sister to us." Dont count on this money