2007-05-31 12:04:40 · 6 answers · asked by Bonnie L 1 in Business & Finance ➔ Taxes ➔ United States
No.
When a person dies, the person handling their estate has to complete the deceased's final tax return to cover the income taxes on income earned during their final year of life. Any taxes due on that tax return will be paid by the estate. Depending upon the size of the estate, there may be an estate tax. However, that is also paid by the estate. People who inherit money from the estate do not pay FEDERAL INCOME taxes on the inheritence. States may impose an inheritance tax. You will have to check in your state.
2007-05-31 13:25:54 · answer #1 · answered by NGC6205 7 · 3⤊ 0⤋
No one EVER pays INCOME tax for an inheritance. The US does not have a Federal inheritance tax. Depending on the size of the estate, there MAY be an estate tax that is paid before you inherit. Some STATES have an inheritance tax.
2007-05-31 13:05:34 · answer #2 · answered by STEVEN F 7 · 1⤊ 0⤋
Generally, inheritances are non-taxable.
If some of the inheritance transferred to you is income in respect of the decedent (also called IRD...) then that is taxable.
IRD is income that would have been taxable to an individual had he/she received it before death. It is not, therefore included on the decedent's final tax return. This income must be reported by the decedent's estate, beneficiary, or any other person whom the estate designates as having the right to receive it. It retains its characteristic as taxable income and is taxable to the beneficiary when distributed.
Edit:
Least you become confused by my answer, please know that inheritances are generally NOT taxable. But it is possible for payouts to bypass the estate and then it may be taxable. If in doubt of this fact I refer you to another questions: http://answers.yahoo.com/question/index;_ylt=Ak46CjfeyYGSjLJjEy_gkgojzKIX?qid=20070602213639AAMUTtT that involves this exact problem.
2007-05-31 12:31:38 · answer #3 · answered by Anonymous · 1⤊ 0⤋
No. An inheritance is a distribution to you that has had any required taxes taken out by the court before the dispersal is made. What you get is not subject to any taxes; have a wonderful day.
2007-06-01 04:23:50 · answer #4 · answered by acmeraven 7 · 0⤊ 0⤋
Any estate tax due on the estate is paid by the estate. The beneficiaries do not pay tax on the bequests they receive from the estate. A few states do have an inheritance tax but that is normally paid on your behalf by the estate. If the estate doesn't pay that, you will have to.
2007-05-31 14:23:44 · answer #5 · answered by Bostonian In MO 7 · 1⤊ 1⤋
Yes.
2007-05-31 12:18:15 · answer #6 · answered by Anonymous · 0⤊ 8⤋