• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Taxing inheritance/insurance money

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

dgrisso71

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

If you lose a parent and your remaining parent gets the life insurance money and gives you $30K or $40K, do you have to pay taxes on this? I don't think the living parent gets taxed on the insurance money and doesn't seem fair for the child to get taxed on the gift/inheritance. If so, is there a way around this?
 


LdiJ

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

If you lose a parent and your remaining parent gets the life insurance money and gives you $30K or $40K, do you have to pay taxes on this? I don't think the living parent gets taxed on the insurance money and doesn't seem fair for the child to get taxed on the gift/inheritance. If so, is there a way around this?
It wouldn't be an inheritance to the child, it would be a "gift" from the living parent to the child.

Someone can gift 13k in any one calendar year to any one individual without any tax ramifications at all. If someone gifts more than 13k in a calendar year, then the giver of the gift, not the receiver, must file a gift tax return. If the person giving the gift has not exceeded their lifetime exclusion for gifting (currently 1 million dollars, I think, if Congress hasn't recently messed with that) then no gift tax has to be paid, but the giver's lifetime exclusion for gifting plus the amount of their eventual estate that can be excluded for estate taxes, is reduced by the amount of the gift.

Now, this is federal law. State law can vary and I am not familiar with CA law on this particular subject.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top