Last year I used some of my IRA and when I filed my taxes this year on Turbo Tax one of the questions asked, was this inheirted form a deceased spouse. That made me wonder if I did use the inheirted IRA would I pay taxes on it and if so will it be at a differant rate. It also asked what the basses amount was. Would that be the amount at the time of inheritance?
2007-03-15 02:43:03 · 6 answers · asked by Betty 1 in Business & Finance ➔ Taxes ➔ United States
You pay tax at your rate, not your deceased spouse's rate.
The basis of the IRA is the amount of after-tax money that went into the account. It is different than the basis of other inherited property, such as a house.
The basis of the IRA is probably zero, since it is a traditional IRA and it is unlikely that nondeductible contributions were made to it.
If nondeductible contributions were made, a Form 8606 would have been included in the tax return for those years.
2007-03-15 05:14:45 · answer #1 · answered by ninasgramma 7 · 0⤊ 0⤋
Generally the money in a Traditional IRA was pre-tax because a deduction was taken for the money when it was put into the account. If that is the case the inherited IRA is tax the same as any other IRA distribution would be. As for the estate issues if your husband did not have 2 million gross assets don't worry about that issue.
2007-03-15 03:17:52 · answer #2 · answered by ? 6 · 0⤊ 0⤋
Inherited IRA's are fully taxed at the same rate as other income when withdrawn. The only special deduction allowed for inherited IRA's is any Federal estate tax allocable to the income can be deducted under IRC Section 691. As a spouse no estate tax was paid so no deduction. That could be one reason for the question.
2007-03-15 03:34:40 · answer #3 · answered by spicertax 5 · 0⤊ 0⤋
I would highly recommend consulting a CPA to do your taxes if this is the first year since your husband died to be sure all of the estate issues are handled correctly. I would not rely on the advice of friends or strangers for something that could come back to bite you (in the form of fines and audits from the IRS). Doing it right the first time, even though there is a fee from the CPA, is well worth the time and money.
2007-03-15 02:52:37 · answer #4 · answered by nightngle 4 · 0⤊ 0⤋
This depends on your age, and if you are eligible to withdraw from this IRA.
2007-03-15 02:51:41 · answer #5 · answered by Brian S 2 · 0⤊ 0⤋
i think federal takes their $$ right off the back....state takes theirs when you file ur taxes..how much.. that i dont know
2007-03-15 02:54:28 · answer #6 · answered by stop_lyin 2 · 0⤊ 0⤋