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11-10-2008, 11:40 AM
| | Junior Member | | Join Date: Jun 2007
Posts: 15
| | | Inheritance Taxes
What is the name of your state (only U.S. law)? Washington
I am inheriting a fair amount of money from my grandmothers estate and am wondering if there is a maximum amount you can recieve before having to pay taxes on it. She lived out of state. |
11-10-2008, 11:49 AM
| | Senior Member | | Join Date: Sep 2004
Posts: 1,977
| | | Generally, as the recipient of a bequest, you do not have a tax liability.
If the estate is large enough, there may be federal or state estate taxes due. But the estate is liable for those and the administrator should be taking care of them before any distributions are made.
There may be state inheritance tax depending upon the state where grandmother resided. Maybe a dozen states still have inheritance taxes. Usually, a will specifies that the estate handles those, also.
__________________
Arthur Carlson: Well, first thing we do is call an attorney.
Andy Travis: You always say that.
Arthur Carlson: Yeah, but this time it's appropriate. |
11-10-2008, 01:35 PM
| | Junior Member | | Join Date: Jun 2007
Posts: 15
| | | I guess then my next question is, is it reportable income for paying federal income taxes, or is it all free money?
Thanks. |
11-10-2008, 02:13 PM
| | Senior Member | | Join Date: Mar 2006
Posts: 5,018
| | | Again, I am astonished at the inability to read. The only income tax *you* will pay on the inheritance is *possibly* on the income it earned after death and before you received it. (Unless we're talking about an IRA or 401K-type scenario.)
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11-10-2008, 02:24 PM
| | Senior Member | | Join Date: Sep 2004
Posts: 1,977
| | | No, it is not.
(I almost hesitate to mention this since it causes confusion when we do. But, for completeness sake....
If the estate has taxable income while it is being administered - say, interest income - the estate must report the income and may have a tax liability. The estate may pay the income tax itself or, if the income is distributed to beneficiaries, it may issue what is called a Form K-1 so that the beneficiaries report the income on their own tax returns. If there is a significant amount of income, it is usually better to have the beneficiaries report it due to differences in the marginal tax rates for estates and individuals.
The distribution of the deceased's assets to you is not subject to income tax. There is a possibility, slight in most cases, that you could receive part of any income that the estate realizes and have to report it on you income tax return. But, don't sweat it.)
__________________
Arthur Carlson: Well, first thing we do is call an attorney.
Andy Travis: You always say that.
Arthur Carlson: Yeah, but this time it's appropriate.
Last edited by anteater; 11-10-2008 at 02:27 PM.
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