If your income is just $13000, and the IRA that you inherited is just $13000, you might want to take the full amount out out now. If you are single, your taxable income would be $26000-$13850=$12150. Your tax would be quite low then. If you are not single, here are the standard deductions for other filing status:
| Filing status |
2023 standard deduction |
| Single |
$13,850. |
| Married, filing separately |
$13,850. |
| Married, filing jointly; qualified widow/er |
$27,700. |
| Head of household |
$20,800. |
Generally speaking, only the distributions from an inherited traditional IRA are taxable, just as they are for non-inherited traditional IRAs. Distributions from an inherited Roth aren't taxable unless the Roth was established within the past five years.
Inherited 401(k) plans are (or eventually will be) taxable, but the amount of tax depends on the 401(k) plan rules. For example, many 401(k) plans require a lump-sum distribution upon the death of the account holder. The surviving spouse can roll the 401(k) into an IRA, but if the beneficiary isn't a spouse, they might be forced to take a lump-sum payment and the tax bill that goes along with it.
When it comes to inherited IRAs and other retirement plans, the rules can get pretty complicated, but we're here to help. When you indicate in TurboTax that your IRA or plan was inherited, we'll ask a series of questions to determine how much, if any, is taxable on this year's return.
As far as it being inherited twice, I don't think you have to be concerned with that. Only have to be concerned with your inherited portion.
As far as bankruptcy, I would discuss this with your attorney.
Here is a great article on this subject: https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-income/inherited-ira-retireme...
You can click the link or copy and paste it into a browser.
Hope this helps,
Katie S.
Katherine S 63
