death benefit

[jefemalaka]

if i received a death benefit when my parent passed away, how much tax will i owe, and can i pay it now?

[John-H2021]

If it is a death benefit from a life insurance policy then it is not taxable. If it is from a retirement plan it is taxable and taxes should be withheld when the money is disbursed to you.

[jefemalaka]

Hi again,

it was from a retirement plan. Do you know the % ill have to pay? (10% - 20%)?

[jefemalaka]

20% was withheld when it was disbursed, so im good right?

[John-H2021 · Accepted solution]

The percentage of tax will be based on your total income from all sources. 

[jefemalaka]

much appreciated! Thanks!

[John-H2021 · Accepted solution]

20% is the standard withholding, you can use the refund calculator to make sure it is enough

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

[Linda-SG]

It depends.  If the death benefit was an inherited traditional IRA, you will most likely pay income taxes at your ordinary tax rate on the distribution.  (Not applicable to a Roth IRA, as long as the Roth IRA was open for at least five years.)  Federal tax law requires withholding of 20% of the taxable portion of the lump sum benefit paid.  If your ordinary income tax rate is more than 20%, you will pay the difference in taxes.  It may help to use a Tax Calculator such as TurboTax's Tax Caster tax calculator  to determine how much you will, or will not, owe when you file your taxes.