Someone leaves you money in will or estate do you have to file inccome tax on what was left to you?

Answer 1

If you receive the proceeds under a life insurance contract because of the death of the insured person the benefits are not taxable income and do not have to be reported. Any interest you receive would be taxable and would need to be reported just like any other interest received.

An estate or trust, unlike a partnership, may have to pay federal income tax. If you are a beneficiary of an estate or turst, you may be taxed on your share of its income distributed or required to be distributed to you. However, there is never a double tax. Estates and trusts file thier returns on Form 1041, U.S. Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1040), Beneficiary's Share of Income, Deductions, Credits, etc....

I would suggest upon receipt of the income to speak to a tax professional in your area. If you receive a Schedule K-1 the money will have to be reported on your tax return and the money received may not be taxable to you, however if there is interest earned on the money you receive that amount would be taxable to you.

Answer 2

No, not for federal, unless you were left something tax-deferred like an IRA or 401K - then you'd owe tax on it.

Since state laws vary, you might be liable for state tax on it.

Answer 3

It's called inheritance tax. If you're in the U.S. the laws changed recently, raising the lower limit at which taxes are owed. I think it's currently anything below $250,000 is non-taxed. Check with an attorney though.

Answer 4

It depends on how much, and your taxable status. You do have to declare it...