Can this money be taxed again?

Question

I will be inheriting $11,000 from my grandparents' estate in the near future. The money is revenue from stocks, and will be evenly distributed 4 ways. Taxes have already been taken out, and the money has been put in to a bank account in the name of the estate. Can I receive the full $11,000 without it being taxed again, or should I take some of it this year and the rest next year?

Just to clarify, the stocks have been sold. The money in question is from the sale of the stocks.

Answer 1

You will owe no tax. Any taxes that may be due have been paid from the estate. Generally, the cost basis of the stocks will be their price on the date of death. The only tax the estate (not you) would owe would be on the appreciation from the time of death until the time of the sale and any interest earned on the funds until they were distributed..

Answer 2

The money you receive will not be taxed at the Federal level, however any interest that is earned after you take custody is fully taxable.

A few states still have inheritance taxes although those are usually paid by the estate for you. Check with the Executor of the estate on that issue.

Answer 3

You'll pay tax on any appreciation of the stock between the time of your grandparent's death and the time you sell the stock, or if it was sold by the estate, on any interest on the money. Other than that, the original $11K won't be taxed again - the estate will have paid that.

Answer 4

If the money has already been taxed, then there will be no more tax to pay. If it is getting interest, then you will pay tax on that portion only.

Answer 5

It is not taxable income to you. It is a gift (or bequest) from your grandparents.