Will I have to pay tax on $10000, that I inherited?

Answer 1

Yes we have an inheritance tax that is about 50% Sorry!

Answer 2

Wow! Another butt-load of BAD INFORMATION! For the most part anyway.

"Mark S" is the only correct answer and even his isn't totally correct -- but it's good enough to not get a "thumbs down" rating at least from me. EADave started off well but fell on his sword when he started talking about Gift Tax instead of inheritances. (I hope you're not an EA, Dave, as your name implies!) The others are just plain clueless (aside from the other one who endorsed Mark S' answer) and have no idea what they're babbling about.

Here's the missing bit, to be added to Mark S' answer: The money you receive from an inheritance, be it $10 or $10 million, is completely TAX FREE to you at the Federal level. A few states still have an inheritance tax although that's usually paid by the estate. Check with your state's tax authorities to see if there is a state inheritance tax. And if there is, check with the executor of the estate to see if it was paid by the estate of if you need to pay it yourself.

Answer 3

There is no Federal Inheritance Tax (the tax the heir pays on the amount they inherit). If there is any Federal Estate Tax (the tax the estate pays if the total estate is valued at more than the exclusion amount), the estate pay that before any of the heirs receive their inheritances. Inheritance is not income under Federal laws and regulations so there is no income tax owed to the IRS on your $10,000. Most states do not have an Inheritance Tax. There are eleven states that have a state Inheritance Tax and the amount of tax varies depending on the state, the amount of the inheritance, and the heirs relationship to the deceased (generally a friend pays more than a cousin who pays more than a child, who pays more than a spouse). So it depends on which state you live in. You need to check the inheritance Tax law for your state.

Answer 4

If you read all the answers up to this point, you can see who knows what they are talking about, and who is clueless.

I would add that if you inherited a retirement account, such as a traditional IRA or 401k, then income tax will be owed when it is distributed to you.

If you inherited Treasury bonds and taxes were never paid on the interest, you will pay tax on that interest.

Otherwise, property or money you inherit that was not tax-sheltered by the benefactor is going to be tax-free to you.

Answer 5

Mark S is correct - other answers are way off. The inheritance itself is distributed to you by the executor after payment of the decedents debts and the taxes due on the estate. Of itself the $10,000 is totally tax-free to you. If you invest the cash received the earnings you receive after the funds are in you hands are taxable in the same mannyer as your other income.

Answer 6

There could be inheritance (estate) tax on the value of the gross estate, but this tax is paid by the estate, not the heirs.

The property you receive is not subject to income tax, but any earnings on the assets would be such as interest, dividends or rents from rental property.

Also, if you sold the asset, you could pay tax on the capital gain.

Answer 7

It depends. If the inheritance received is in the form of cash, no. If the inheritance is in the form of stocks, mutual funds or other property, you may owe tax when you sell the property.

The tax liability, if in cash, falls on the donor not on the donee. The donor will pay no tax on the gift as long as the gift does not exceed $12,000 per person per year.

Answer 8

Yes. The inheritance tax must be paid on the next year's income tax return.

Answer 9

Holy crap! There are so many bad answers I had to just add to balance it out somewhat.

Mark S
Bostonian
and Ninasgramma
are the people that have correct or mostly correct answers.

Answer 10

Yes income tax need to be paid whether it is inherited because now u own it.