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death benefit

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

 

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2 Best answer

Accepted Solutions
John-H2021
Employee Tax Expert

death benefit

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

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John-H2021
Employee Tax Expert

death benefit

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/

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7 Replies
John-H2021
Employee Tax Expert

death benefit

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.

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death benefit

Hi again,

 

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

death benefit

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

John-H2021
Employee Tax Expert

death benefit

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

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

death benefit

much appreciated! Thanks!

John-H2021
Employee Tax Expert

death benefit

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/

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Linda-SG
Employee Tax Expert

death benefit

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.  

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