Question regarding inheriting money

[Lefty]

I was wondering if a relative passes away and leaves you money in his will, do you have to claim that money on your taxes?

 

[dreamcastrocks]

of course. It is part of the estate tax, that the current Congress is trying to repeal. I think estate taxes are about 40% right now, which is absurd.

 

[nothin' but net]

If you know any rich relatives, you should have them gift the money to you right now. I'm sure they would go for it.

 

[Ryanwb]

I thought the first $9,999 is tax free?

 

[Dback Jon]

I was wondering if a relative passes away and leaves you money in his will, do you have to claim that money on your taxes?

NO - any estate taxes are paid by the ESTATE. Anything you get does not have to be declared.

 

[Dback Jon]

I thought the first $9,999 is tax free?

Anyone can gift $11,000/year tax free to anyone else.

 

[Rivercard]

NO - any estate taxes are paid by the ESTATE.

Which is really a nice way of saying they tax you before you get it.

Kind of like saying your income taxes are paid by your paycheck.

 

[nothin' but net]

Anyone can gift $11,000/year tax free to anyone else.

PM me if you need the address to send the check.

 

[Lefty]

Which is really a nice way of saying they tax you before you get it.

Kind of like saying your income taxes are paid by your paycheck.

So if the money is already taxed before I receive it, I don't have to report it on my taxes?

 

[AZZenny]

There are no taxes up to a significant amount of the estate -- used to be $600,000 -- if what you inherit was already taxed, i.e., was in a savings account, not in an IRA. If property is sold, there would be capital gains taxes due, but if its under the $600,000 amount, no estate taxes in addition.

Normally YOU don't have to pay taxes, the estate does. (sometimes the estate wants you to pay because it could be a lower tax rate on some individuals, I was told). You get like a K-1 showing that it's inherited income, not taxable.

I was executor for my sister a few years ago, and it gets tricky dealing with life insurance, savings accounts, IRAs, etc., but bottom line was my brother and I did not pay any estate or income taxes since her estate was way less than $600K.

 

[Dback Jon]

So if the money is already taxed before I receive it, I don't have to report it on my taxes?

Correct - every person that dies has an estate (whether you formally have set up one or not) - if that person has any assets to distribute, then the executer of the estate (usually an attorney) has to fill out paperwork with the IRS. For 99% of the country, no taxes are owed on the estate, and the will is executed as planned.

BTW - this is all from memory of my B-Law and Tax classes in college. There may be something you need to file (K-1 - thanks Pam for reminding me of the form name )if the amount inherited is large, but your tax preparer would know that answer.

 

[SirStefan32]

I think hiring an attorney would be a wise investment on your part.

 

[dreamcastrocks]

Anyone can gift $11,000/year tax free to anyone else.

It is actually $63,999 tax free.

 

[Dback Jon]

It is actually $63,999 tax free.

No, that is totally incorrect.

And actually, the amount increased to $12,000/year beginning in January.

 

[Rivercard]

No, that is totally incorrect.

And actually, the amount increased to $12,000/year beginning in January.

That's good to know - I thought it was $10,000/year. I'll have to tell my parents about this.

 

[Dback Jon]

That's good to know - I thought it was $10,000/year. I'll have to tell my parents about this.

And married couples can give $24,000/year per person...

 

[Rivercard]

And married couples can give $24,000/year per person...

Well then I'm glad my folks are still together.

 

[dreamcastrocks]

No, that is totally incorrect.

And actually, the amount increased to $12,000/year beginning in January.

You are right. You can receive up to $64,000 per year, but give $12,000. I didn't catch the "give" from your previous post.

 

[Ryanwb]

I was wondering if a relative passes away and leaves you money in his will, do you have to claim that money on your taxes?

What are you plotting?

 

[thirty-two]

If the person who dies has a lot of debt, does any of that have to go towards their debt?

 

[SirStefan32]

YAY, Mulder is back.

 

[thirty-two]

YAY, Mulder is back.

Bring it on, Krycek!

 

[SirStefan32]

Poor Krycek, always got his ass kicked by Mulder, Skinner and even Dogget

 

[Dback Jon]

If the person who dies has a lot of debt, does any of that have to go towards their debt?

Generally, yes. There are certain exceptions to that, though.

 

[Rivercard]

I've always wondered...... if a person was falsely assumed dead (like in the Tom Hanks movie CASTAWAY) and then re-appears after their estate has been distributed, would they get their money & property back?