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timdebs2021-gmai
New Member

HOW DO I SHOW AN INHERITANCE PAYMENT ON THE TAXES

 
2 Replies
macuser_22
Level 15

HOW DO I SHOW AN INHERITANCE PAYMENT ON THE TAXES

That depends on how it is reported to you.

 

On a 1099-R?

On a K-1?

**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.**
Opus 17
Level 15

HOW DO I SHOW AN INHERITANCE PAYMENT ON THE TAXES

Generally speaking, inherited cash (money) is never taxable.

 

If you inherit assets, that are sold after the person's death and converted to money (such as stocks, other investments, or a home) then you owe tax on the increase in value (if any) between the date of the person's death and the date of the sale.  Such income might be reported on a 1099-S (for a home) or a 1099-B (for a brokerage account).  

 

If the estate earns income that is passed to you, it may be taxable although the principal may not be.  Estate income may be reported on a K-1.

 

If you inherit a tax-privileged account like an IRA, 401(k), pension or annuity, it is probably taxable to you because the contributions were pre-tax (never taxed) so the withdrawal is always taxed, whether it was withdrawn by the original owner or an heir.  This kind of income is usually reported on a 1099-R. 

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

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