Do we pay taxes on the $10k we received from an inheirited IRA (parent) which was more than 5 years old and if so where do we put that in the tax forms?

[neilbriancohen]

Both my wife's parents died in 2017. We have filed their tax forms, but we received about $10k from her dad's IRA as a lump sum distribution (her sister also got $10k). How do I report that? And do I need to report it? I've gotten different answers from different people...

[Hal_Al · Accepted solution]

Is it a Roth IRA or a traditional IRA? You mentioned the 5 year rule, which is relevant for Roth IRAs.
An Inherited  Roth IRA is not taxable, when distributed.
A Traditional IRA id fully taxable, unless you have records of a tax basis (non deductible contributions made by your parent, in the past). Any tax basis will usually show on form 8606 of your parent's last tax return. Tax basis is fairly rare and even when they exist are usually a small fraction of the total.

[neilbriancohen]

Thanks - this is not a Roth IRA, so that answers the main question. Still not sure where to put the 10k as income... But I can probably figure that out... Much obliged,

[macuser_22]

Enter a 1099-R  here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu  (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type:  Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE:  When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases.  You can always return as shown above.]

[neilbriancohen]

I'll give that a try - thanks very much!