We file taxes separately. She is a full time grad student and has not had any income for the last three years. Since this is the end of the year are there any tax deductions (charitable or otherwise) she should be aware of to apply before this friday.
2006-12-27 18:14:52 · 8 answers · asked by mog_ron 1 in Business & Finance ➔ Taxes ➔ United States
There is no income tax on inheritance or gifts. Estate tax is imposed at the estate level. Unless the executor or trustee is a madman, any estate tax was paid before the checks were sent to beneficiaries. As a technical matter, your wife could have to pay a portion of the gift as her share of estate tax if the executor did in fact fail to pay the estate taxes (which are also the executor's personal liability).
2006-12-27 19:17:36 · answer #1 · answered by mattapan26 7 · 0⤊ 0⤋
The first question that must be addressed is the state you live in. Some states have inheritance tax but most do not. You should check the web site for your states taxing authority. As for the Federal income tax there will not be any unless the funds were "pre-tax dollars" held in something like a Traditional IRA. If the money was in some type of interest bearing account between the date of death for her grandfather and the date she received it there would be tax due on the interest. As for filing separately that may not have been the best way. You may want to have a tax professional review the past three years to determine if Married Filing Jointly would have benefited you. If it would you can amend those years and receive the increased refund.
2006-12-28 10:10:28 · answer #2 · answered by ? 6 · 1⤊ 0⤋
Was this inheritance outside of a retirement account? If so, there is no income tax on this money.
Was this inheritance part of a traditional IRA or pre-tax employer plan? Then there will be income tax due on this inheritance. If this is the case she should study her options for receiving this money so her taxes are minimized.
For planning purposes, be aware that any earnings on this money after the date of inheritance are taxable.
2006-12-28 04:34:20 · answer #3 · answered by ninasgramma 7 · 2⤊ 0⤋
Inheritated money and assets are not income to the receiver. If any estate or inheriance taxes are due the executor of her grandfathers estate should have paid those before your wife received anything.
Invest the money and enjoy.
2006-12-28 06:34:05 · answer #4 · answered by waggy_33 6 · 0⤊ 1⤋
There is inheritance tax. Income tax is something else.
2006-12-28 02:16:55 · answer #5 · answered by angrysandwichguy2000 3 · 0⤊ 0⤋
She has no income tax or inheritance tax payable on this amount. It is tax free.
2006-12-28 16:04:22 · answer #6 · answered by woodluvto 2 · 0⤊ 0⤋
depends on where exactly it comes from. Life insurance= tax free regardless of amount. IRA or annuity= maybe
2006-12-28 09:06:46 · answer #7 · answered by ricks 5 · 0⤊ 0⤋
She will not have income tax on this amount.
2006-12-28 03:39:28 · answer #8 · answered by Jerry 3 · 0⤊ 1⤋