Inheritance

[diamondcut0402]

My father-in-law died in 2020.  In 2021 we received a final cash inheritance which came from his IRA.  This was divided up 4 ways each equating to $50,000.  My brother-in-law is the executor of the estate and was told we do not need to claim this anywhere on taxes.  We already filed our 2021 and now we received a 1041 Schedule K-1 form from him.  Are we supposed to claim this amount of inheritance??  Are taxes owed??  Very confused.  Any suggestions would be helpful.  I live in Michigan

[Anonymous_ · Accepted solution]

Are there any figures in Part III of the K-1?

You should contact your brother-in-law and inquire as to who prepared the 1041.

Typically, an inheritance is not taxable, but inheriting a retirement account is an exception.

[MinhT1]

Inheritance is not taxable and not reported on your return.

However, distributions from the inherited IRA are taxable.

[diamondcut0402]

There are figures.  He sent a picture of the form via text and is mailing out to us.  He's stating that there is around $6000 we have to claim.  He said his accountant has done a 180 on him.  Not sure what that means.  All I know is we were told originally nothing had to be claimed.  And that the executor (brother-in-law) was withholding an amount out to pay any taxes that were owed.