How do I claim taxes withheld from inheritance money

[rullan52]

Hello,

My mother who lives in Puerto Rico, sold her home there in 2022. As one of her heirs, I was to receive 20K from the sale however, they withheld 3K for taxes. I since learned that the 3K should not been withheld for taxes since inheritance is not taxed. My question is how do I claim the 3K that was withheld since I filed my taxes for 2022 already in the state I reside in the US?

[Opus 17]

You would need to file a PR tax return showing zero PR income, zero PR tax owed, $3000 of PR tax  withholding, resulting in a $3000 refund from PR. 

Turbotax does not support PR tax returns.  See here for more.  

https://ttlc.intuit.com/community/state-taxes/discussion/how-do-i-file-a-puerto-rico-tax-return/00/2...

[Opus 17]

Also (this is an important nitpick), no taxes were withheld from your inheritance.  You inherited property, which you sold under your name (and the name of the other heirs), and PR withheld a portion of the sales proceeds.  It is the responsibility of each heir to file an income tax return that reports their share of the home sale, and calculate whether any tax is due, and pay the tax or claim a refund.  

Under US law, you inherit property with a "stepped up" cost basis equal to the fair market value on the data of the previous owners death, which is why selling inherited property soon after the previous owner's death is usually not taxable, there is no capital gain (the difference between market value and selling price is zero, so there is no gain).  It sounds like you assume PR follows the same stepped up basis rule, but I don't know that for sure.  You may need to look into that first. 

[dmertz]

"My mother who lives in Puerto Rico, sold her home there in 2022. As one of her heirs, I was to receive 20K from the sale however, they withheld 3K for taxes."

Something doesn't add up.  I can't see how anything about the sale of the home would result in any tax withholding being credited to you.

Who are "they" and why would they withhold taxes on the sale of a home at all?  Your statement implies that the sale occurred before your mother's death, so the sale of the house simply added to the cash in the estate.  Perhaps what actually happened is that some of the cash in the estate went to pay estate expenses, leaving only $17k as your share of the cash payable to you from the estate.

If your mother's estate had tax withholding on some item of income paid to the estate, it's possible for the estate to pass any taxable income through to you for taxation on your individual income tax return, but the tax withholding cannot be passed through.  The estate must claim any tax refund on withholding paid by the estate and then distribute the respective shares of the refund to the heirs of the estate.