I received a large sum of money from my mother in law. Will I have to pay taxes on it?

Answer 1

What is this money?

A gift? No income tax.

An inheritance of personal assets...no income tax.

Repayment of a loan you made to your relative....income tax on the interest paid.

If the money is a personal loan...no income tax.

Payment for services...taxable.

Payment for property...fully or partly taxable depending on the circumstances.

I'm sure there are other cases but the point is, it isn't the amount of money or who gives it to you that determines whether the money is taxable. The money becomes taxable depending on why it is given to you.

Answer 2

1. If this is a gift or inheritance, now this is your money and you don't have any federal tax liability. For State liability, most states don't have any taxes, however check your state rules.

2. If the money is gift from your mother in law, then she is responsible for filing gift tax return and paying gift tax.

3. If it is inherited money, then if your mother in law's estate is over 2 million, her estate has to file estate tax return.

So you don't need to file any return for the money received from your mother in law.

Answer 3

It depends on what it was for. If it was a gift, no, you don't have to report it or pay taxes on it. If the amount was over $12,000 in one year, she will have to file a gift tax return, but probably won't have to pay tax on the gift unless her total gifts to all recipients above the $12K per person per year limit have totalled over $1 million.

If you did work for her and the money you got was payment for the work, then yes, you'll have to pay tax on it.

Answer 4

Depends on how much it was and if it was a gift. You are allowed to receive a certain amount tax-free as a gift. You should check on the IRS website.