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New Member

Do I have to pay taxes on money that was inherited, my wife received an IRA in the amount of $24,000 from her father, does she have to pay taxes on this ?

 
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Level 15

Do I have to pay taxes on money that was inherited, my wife received an IRA in the amount of $24,000 from her father, does she have to pay taxes on this ?

Assuming that it is a Traditional IRA, yes, it is taxable as ordinary income unless there was some after-tax "basis" in the IRA.  You would need the fathers past tax returns to see if he ever filed a 8606 form if he took a distribution or made a non-deductible contribution.

 

You should receive a 1099-R with a code 4 in box 7 for an inherited Traditional  IRA. 

 

(If a Roth IRA 1099-R with a code T in box 7 then it would not be taxable since Roth's are after-tax money)

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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Level 15

Do I have to pay taxes on money that was inherited, my wife received an IRA in the amount of $24,000 from her father, does she have to pay taxes on this ?

was the IRA cashed in?  Was it a ROTH or other type of IRA?

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Level 13

Do I have to pay taxes on money that was inherited, my wife received an IRA in the amount of $24,000 from her father, does she have to pay taxes on this ?

Your wife has several options as to what to do with her inherited IRA.  These are well-described in this web page from Charles Schwab (be sure you click on the "non-spouse" options):  https://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/inherited_...

 

If she's not sure what to do, I strongly suggest she talk to the bank or brokerage that held her father's IRA.  I'm sure they will help her.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**