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  #1  
Old 10-22-2008, 05:37 PM
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My wife's inheritance question???

What is the name of your state (only U.S. law)? California

My wife inherited a large sum of money a few years ago that is being paid out over a 20 year time span. Last tax year (2007), we had to pay taxes on the first payment of her inheritance. The taxes were large enough, that ALL of our tax rebate (filed jointly) was eaten by the taxes owed on the inheritance payment. Same guy that does out Federal Income taxes, also filed the tax papers sent to my wife about the taxes owed on her inheritance....So, that is why we didn't get a tax refund last year.

My question is, if my wife and I divorce, would I have a LEGAL right to some of her inheritance. (I understand it's HER INHERITANCE, and not mine, but I paid the taxes on it in 2007)

I not looking to get divorced, but I want to be KNOWLEDGABLE if something happens!

Thanks,
Rhino1XL
  #2  
Old 10-22-2008, 05:42 PM
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No, so long as the inheritance itself is not co-mingled with your marital "stuff", you aren't entitled to it.
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  #3  
Old 10-22-2008, 05:46 PM
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So, I REALLY need to file the "Innocent Spouse" form at the IRS. Essentially it says that I'm "Innocent" from paying HER taxes on HER inheritance.
Last edited by Rhino1XL; 10-22-2008 at 05:53 PM.
  #4  
Old 10-22-2008, 05:59 PM
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Quote:
Originally Posted by Rhino1XL View Post
So, I REALLY need to file the "Innocent Spouse" form at the IRS. Essentially it says that I'm "Innocent" from paying HER taxes on HER inheritance.
If you don't want to be responsible for her taxes, then file separately.
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  #5  
Old 10-22-2008, 06:00 PM
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I am confused. Why does your wife have to pay ANY taxes on the inheritance?
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The information I gave is based on my 7 seconds of research on Google. Review the information yourself to make an informed decision.

Communication is KEY - 10 mins of talking now can save you months of headaches later!

Masterfully stating the obvious to the oblivious! (Thanks SP!)

Tell it like it is! When all else fails, make up a statistic!

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  #6  
Old 10-22-2008, 06:06 PM
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That was my question!! I guess Citigroup screwed up last year. (2007) SO, we got a huge tax bill from the IRS during the 2007 tax filing deadline on my wife's inheritance. While our taxes were being calculated, Citigroup sent us the paperwork and we included it on our 2007 taxes....
I believe that Citigroup SHOULD have paid the taxes, it was a miscalculation on THEIR part, and had nothing to do with me, and wasn't my wife's fault either!

Maybe we should sue them?

Thanks guys (and gals)!
  #7  
Old 10-22-2008, 06:14 PM
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It's still not making sense. Find a CPA and have a talk with him/her.
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Masterfully stating the obvious to the oblivious! (Thanks SP!)

Tell it like it is! When all else fails, make up a statistic!

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  #8  
Old 10-22-2008, 06:17 PM
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While your basic question was answered... If you have any rights to the inheritance in a divorce...

It would help in understanding the tax bill if you specified the source of the inheritance. Was it an annuity? Was it an IRA? A 401(k)?
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  #9  
Old 10-22-2008, 06:24 PM
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Her uncle was a very rich guy. He owned 1300 appartments in the Long Beach California area. He also worked for Proctor and Gamble all of his life and took a decent amount of his income in stock options. (he started with P&G very early in life and worked with the company up until his untimely death... he fell in the bathroom and died of a massive head injury) He left ALL of his money to my wife and her 3 sisters. (4 people total split the money)
  #10  
Old 10-22-2008, 06:25 PM
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Have your wife talk to a CPA.
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The information I gave is based on my 7 seconds of research on Google. Review the information yourself to make an informed decision.

Communication is KEY - 10 mins of talking now can save you months of headaches later!

Masterfully stating the obvious to the oblivious! (Thanks SP!)

Tell it like it is! When all else fails, make up a statistic!

Gender references shall apply equally to the other gender. I will not correct gender mistakes (unless I want to)
  #11  
Old 10-22-2008, 06:31 PM
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Quote:
Originally Posted by Rhino1XL View Post
Her uncle was a very rich guy. He owned 1300 appartments in the Long Beach California area. He also worked for Proctor and Gamble all of his life and took a decent amount of his income in stock options. (he started with P&G very early in life and worked with the company up until his untimely death... he fell in the bathroom and died of a massive head injury) He left ALL of his money to my wife and her 3 sisters. (4 people total split the money)
OK... That says nothing about why there was income tax due on the inheritance payment. Or why you think Citi screwed up.

Quote:
Zigner: Have your wife talk to a CPA.
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  #12  
Old 10-22-2008, 06:31 PM
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OK guys, thanks!
  #13  
Old 10-22-2008, 07:36 PM
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Quote:
I am confused. Why does your wife have to pay ANY taxes on the inheritance?
Because the inheritance is over 20 years, a trust was set up. There is a K-1 issued from the trust for the income allocated to the beneficiary which may or may not be related to the actual year's distribution. He's not paying taxes on the inheritance, but on income (which is related to the inheritance).
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  #14  
Old 10-22-2008, 08:03 PM
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Quote:
Originally Posted by tranquility View Post
Because the inheritance is over 20 years, a trust was set up. There is a K-1 issued from the trust for the income allocated to the beneficiary which may or may not be related to the actual year's distribution. He's not paying taxes on the inheritance, but on income (which is related to the inheritance).
Ah, I get it now. The "Details in Another Thread" gambit. In addition to the "Let Me See If I Can Get A Different Answer This Time" gambit.
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  #15  
Old 10-22-2008, 08:37 PM
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Might I suggest that quarterly payments that help cover the taxes. OR, have enough taken out of regular paychecks so that you don't owe at the end of the year.
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