Do I have to Pay Taxes on money given to me and money from an estate?

Question

my father died,his will stated that myself and my sister split whatever is left in his bank,savings etc accounts.My sister is shady she is overseeing the will through his attorney.I received 8,000 dollars,she now "claims" she turned my information into the IRS and that i must pay taxes on the money.She is in Cali where the will was drawn & where he died,I am in Texas.Also,he sent me 7,000 dollars about 3 weeks before he died in the form of a wire transfer from his bank to mine.She also has claimed to turn it into the irs so i will have to pay taxes on it.Can she legally do this and can the IRS make me pay taxes on it? The 7000 was a gift from him.so in total she wants me to pay taxes on 15,000 dollars.Can this be done?

t/y everyone for the feedback.It's a long story with reguards to his death.My sister claims she has hired his attorney as her own to handle the estate.it went to probate court on aug 22 but have heard nothing.my sister wont tell me anymore information and this attorney is a complete d*ck,cause my sister told him i'm a crack ho,which is untrue,so when I do call to ask about the estate,he reguards me as a money hungry idiot.My father died under foul play which his body was held at the morgue for 20 days due to police investigation,my mother died 6 weeks prior to this due to a suicide which was also put into investigation,my sister was their "caretaker".This 8 thousand is from his bank accounts.The house,cars and other items somehow got transfer into her name,all the titles etc,before he died.The lawyer sent me copies of the titles,which show just his sig on it not hers.When he died the attorney said the cars etc were to be sold and split,now he claims my father gave them to her.fishy!!!

Answer 1

First of all, gifts are never, never, and I repeat NEVER taxable to the person who receives them, no matter what the amount. The only thing is that the gifts to you if they were given within a certain time period before your father's death would be included in your fathers estate as being part of the estate. You say she is in California, and you are in Texas, but you don't say where your dad lived, so I don't know about any state estate tax implications, but for federal purposes, if your dad died in 2007 unless his net estate exceeded $2,000,000 there would be no federal estate tax owed. Sounds like you called your sister the right name "shady". I think she's trying to cheat you out of your share of the inheritance.

If you feel you need advice your best bet is to find a tax attorney or CPA in Texas to represent you with your sister, but I am willing to help you if you don't mind dealing with a CPA in Massachusetts.

As far as I know, the only state that taxes an inheritance at all is Pennsylvania, and neither your nor your sister live there.

Answer 2

You will not have to pay taxes on the $7,000 b/c it is considered a gift. You father would be the one to pay any applicable taxes on the gift to you, but b/c it was under $12,000 then he did not have to pay any taxes on it as well. The $8,000 is subject to estate taxes. Technically the estate pays the taxes, therefore you should not have any tax liability for the money that you receive. However, if your sister did not file the appropriate forms with the IRS and did not pay any estate taxes on the money that was distributed then there is a chance that you may have an additional tax liability from the money that you received.

Here is a link to the IRS website that explains the gift tax:

http://www.irs.gov/businesses/small/article/0,,id=164872,00.html

Here is a link to the IRS website that explains the estate tax:

http://www.irs.gov/businesses/small/article/0,,id=164871,00.html

I hope that this helps you out. If you should have any additional questions I suggest contacting a tax professional in your area, or talk to the attorney that your sister is dealing with. Sorry about your loss.

Answer 3

your father when alive is entitled to give you up to 12000 per year as a tax free gift. , so the 7000 should be tax free automatically and wouldn't even be included in the estate. I would contact the lawyer. I can't imagine he would her to do things to you that she's not doing to herself - she sounds like a real idiot. Found out if you can freeze the estate until you get answers you need. For the other 8000, it sounds like too small an amount to be taxable for inheritnace tax, if you two are the sole heirs. Does she even have your social security number? She would have to have that in order to "report" the money to the IRS - google "inheritance taxes - california" and see if you find anything

Answer 4

You generally do not pay federal income tax on amounts received as a gift or distribution from an estate. Federal taxes, if any, are paid by the person giving the gift or the estate itself. Here's a quote from the IRS website:

No tax on the person receiving your gift or estate. The person who receives your gift or your estate will not have to pay any federal gift tax or estate tax because of it. Also, that person will not have to pay income tax on the value of the gift or inheritance received.

Answer 5

Gifts and inheritance are tax free to the beneficiary (there may be tax consequences to the grantor, but this sounds small enough to not be an issue).

It sounds as though she is improperly attempting to apply rules for Independent contractors for 1099 reporting to these gifts/inheritance.

If the IRS contacts you, I would explain the situation and tell them that this is erroneous reporting of a gift/inheritance.

You may want to contact the attorney handling the estate and inform him of her threats (anything in writing?). Don't try to draw him into any sibling squabbles, just alert him to her behavior so he can rein her in if he sees her misbehaving. Also, let him know that you will refer the IRS to him to explain the payments received from your father and his estate (which should clear up the issue for the IRS). Also ask for an accounting of the estate so you can review for any discrepancies.

Answer 6

You aren't taxed on gifts or inheritances at the federal level. There can be state inheritance taxes.

Sounds like your sister is blowing smoke or is clueless.

If some of the $8000 you got was income on assets after your dad died, that would be subject to income tax, but not a distribution of what he had when he was alive. If for example he had property and it was sold and cash distributed to you, you'd only pay tax on the amount that was your share of any appreciation in the property value after he died.

Answer 7

Double check with the IRS( You can call them) but an estate has to be over a million dollars (could be higher now) before you have to pay taxes on it. Also ask your sister for a copy of the estates final settlement from the lawyer.

You sister does not sound like a very nice person.

Answer 8

YOU owe no taxes, tell her she is full of it!

She can not report YOUR gift as taxable or not to you. And based on the amount fo the estate there is no estate tax which SHE should have paid from the estate.

Nor can she report the monies you have received from the estate as taxable based on what you have here.

Answer 9

Ask for copies of the distribution order to make sure you got the right amount. The amount of the inheritance is trivial and not subject to income, estate or gift taxes.

Answer 10

You need to obtain your own lawyer. Your father's death was not foul play and your mother did not commit suicide. You need a private investigator and dig into the death's of your parents. Your parents were well off and they had no intent on dying so early. Your sister is not right and neither is her attorney.