A relative of mine has recently passed away, prior to his passing, he informed me that he had left me some money in the form of an inheritance. My question is, does money that you inherit from family get taxed or need to be reported at all to the IRS?
2007-10-15 17:01:53 · 3 answers · asked by bajicorsair 2 in Business & Finance ➔ Taxes ➔ United States
1. Any thing (money and property) you receive as gift or inheritance, you (the receiver) don't pay any federal tax liability. About any state tax, you need to check from your state's web site.
2. If you inherit a property, your cost basis is the valuation (Fair Market Value) of the property at the date of the decedent's death or the FMV (Fair Market Value) on the alternate valuation date if the personal representative for the estate elects to use alternate valuation.
3. If you sell the inherited property at a price up to your cost basis you don't have any taxes due. However, if you sell the property at price more than the cost basis to you, then you pay the taxes on the profit (sale price minus your cost basis). Report the sale on schedule D of Form 1040.
2007-10-15 17:08:24 · answer #1 · answered by MukatA 6 · 4⤊ 0⤋
As the recipient, you won't pay any federal tax. If the estate total is over $2 million, the estate might have to pay tax, otherwise not. You won't report the inheritance to the IRS.
The estate, or you as heir, might be responsible for state tax. That depends on where you live, and where the person who died lived.
2007-10-15 20:01:25 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
The first million bucks is tax free. After that, you start paying some inheritance taxes. (this amount seems to increase every year and I'm not sure what it is for 2007)
2007-10-15 17:14:40 · answer #3 · answered by Let me steer you 7 · 0⤊ 5⤋