Inherited income

[scottduge]

My mother-in-law passed away in July 2016. My wife got 1/2 of her mother's savings account and her sister got the other half. Should I report it as income and if so, how do I go about it?

[EricG1 · Accepted solution]

Not on your federal return. The IRS doesn't impose an inheritance tax.

Only 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 inheritance tax.

• For Tennessee - The inheritance tax is no longer imposed after December 31, 2015. You do not need to report a cash inheritance from a decedent with a date of death in 2016. 

Interest or other income generated from inherited cash would be taxable.

Related Information:

• Do I need to report inherited property or land?
• Is an inherited IRA or retirement plan taxable?
• Do I need to report life insurance?