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Social Security, Inheritance and Filing

I just turned 70. I live on Social Security alone. My total income from Social Security last year before being adjusted was $16,500. At the end of last year I received an Inheritance of ~ $10,500 which I cashed in in January of this year. Normally I do not file taxes because I live on Social Security alone.  Inheritance is not normally taxed.

My question is do I *need* to FILE a tax return either this year (2022) since I received the Inheritance last last year, or next year (2023) because I cashed the inheritance check in late January /early February of this year?

 

IF I were to hazard a GUESS my guess would be that since I do NOT normally file a Tax Return since I live on Social Security alone; and since my inheritance of ~ $10,500 is way under the taxable limit, and is not reportable as "income", then my GUESS is that I do NOT have to FILE either this year or next. That said, I am not a Tax Expert, and while I would not normally have to file if I ONLY had Social Security, the Inheritance *MAY REQUIRE* me to file a Tax Return, even if I have nothing to tax. 

 

IF I am *REQUIRED* to file a Tax Return, do I file *THIS YEAR* (2022) since I received the check late LAST YEAR  (2021); or *NEXT YEAR* (2023) since the check was CASHED *THIS YEAR* (2022)?

 

I need some guidance here. This is the first time I have inherited any money and I live on Social Security.

 

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2 Replies
DawnC
Employee Tax Expert

Social Security, Inheritance and Filing

You guessed correctly.   You do not file a tax return as the inheritance check (cash) is nontaxable income to you.   Don't file this year or next - assuming your only income is SS or inherited money.  

 

A handful of states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania) have some kind of inheritance tax. Refer to your state's Department of Revenue to see what the requirements are for filing an inheritance tax.

 

Interest or other income generated from inherited cash would be taxable.   For example, if you inherited $10,000 in cash and deposited it into a bank account, generating $40 of interest this year, the $40 would be included in your income as taxable interest.   But if the interest is not enough to create a filing requirement, you do not have to file it.  

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Social Security, Inheritance and Filing

But was it a CASH inheritance, or part of the decedent's retirement plan?

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