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Get your taxes done using TurboTax
An inheritance will be taxable if you inherit an IRA, 401(k), or other retirement account and receive a distribution.
That would be considered "income in respect of a decedent" which is earned by a deceased person prior to death. Because it was paid after death the income is taxable to the recipient in the year paid. Withdrawals from the IRA are subject to the same taxes associated with the account. If it's a traditional IRA, then your withdrawals will be subject to taxes.
You would report the inherited income based on the form it takes. Inherited retirement is reported as 1099-R (retirement section), while inherited property sold is reported in the Investment section.
See the steps below:
- Login to your TurboTax Account.
- Click "Federal" from the left side of your screen.
- Scroll down to "Retirement Plans and Social Security" and click "Show more"
- Scroll down and click "Start or Edit/Add" next to "IRA, 401(k), Pension Plan Withdrawals (1099-R)"
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‎February 24, 2023
7:59 AM