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New Member
posted Dec 4, 2024 8:50:40 AM

Will I need to include an inheritance that I received in tax year 2024 as income when I am filing my tax return

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19 Replies
Level 15
Dec 4, 2024 8:53:22 AM

A cash inheritance is not reported on a federal tax return.  What type of inheritance did you receive?

Returning Member
Feb 12, 2025 7:35:48 AM

which forms do I use to report my inheritance, there was no cost in acquiring my inheritance

Returning Member
Feb 12, 2025 7:36:27 AM

property / land

Returning Member
Feb 12, 2025 7:38:47 AM

I recieved cash for sale of property

Returning Member
Feb 12, 2025 7:41:13 AM

my proceeds came from the property sale

Returning Member
Feb 12, 2025 7:50:45 AM

thanks for your time......any profit from the sale of an inheritance has to be reported, the inherited property in itself is not subject to income taxes, and will not be as long as the beneficiary does not sale the inherited land.  maybe I will send intuit my resume"

Expert Alumni
Feb 12, 2025 7:53:34 AM

Inheritances aren't considered income for federal tax purposes, however any gains when you sell inherited investments or property are generally taxable, but you can usually also claim losses on these sales.

 

In TurboTax you would  report it as investment sale.

  1. Since you did not receive a 1099-B, answer “no” to the 1099-B question or select skip Import 
  2. Select Other for What type of investment did you sell?
  3. Select I inherited for How did you receive this investment? 

The basis of property inherited from a decedent is generally one of the following:

  • The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).
  • The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.You can deduct the selling expenses from the gross proceed.

 Sales expenses include:

  • commissions
  • appraisal fees
  • broker's fees
  • legal fees
  • advertising fees
  • home inspection reports
  • title insurance
  • transfer taxes or fees
  • geological surveys
  • loan charges (points) or other fees paid on the buyer's behalf
  • any fees for a service that helped you sell your home without a broker (listing fees, promotional fliers, etc.)

 

New Member
Feb 16, 2025 9:12:13 AM

My mother passed away in 2024, and I inherited some money.  I received a Form 1099-R from the bank where I deposited those funds, and Box 2a is blank.  When filling-out the appropriate info on my tax form, my taxes went up; I thought that inherited funds are considered non-taxable.

Expert Alumni
Feb 16, 2025 9:16:04 AM

To clarify, is the 1099-R reporting your distribution? What code is in Box 7? Did the account have earnings after the date of her passing? 

New Member
Feb 16, 2025 9:22:35 AM

Form 1099 has the code "4" in box 7.  Yes, the account earned interest after her passing, which I reported via form 1099-INT.

Expert Alumni
Feb 16, 2025 10:07:52 AM

When you entered the 1099-R, with Code 4 in Box 7, TurboTax would know that this was an inherited IRA. 

The questions that follow ask about the Required Minimum Distribution for both you and your mother, as well as what you did with the remaining funds. 

 

Inherited IRA accounts are not taxed when received, however distributions can be. 

New rules are going into affect for IRA non-spouse inheritances. The account was to be depleted within 10 years, however now the beneficiary needs to make Required Minimum Distributions of their own each of those ten years as well as depleting it. 

 

This new regulation is being waived for tax year 2024, but you must make the RMD withdrawals starting 2025. 

 

In TurboTax, enter the 1099-R and continue through the interview. 

If you report that part of the distribution was your mother's RMD, that portion will be taxable. 

If you rolled over the complete balance, select No for her RMD and also for yours. 

Select "I rolled it over" for "What did you do with the money" 

 

The rolled-over balance will not be taxed. 

For Tax Year 2025 and beyond, you must make your own Required Minimum Distribution yearly until this account is depleted within 10 years of your mother's passing. 

 

We are sorry to hear of your loss. 

 

IRS link

New Member
Mar 12, 2025 1:15:32 PM

Will I need to include money that I received as inheritance in 2004 as income?

 

New Member
Mar 12, 2025 1:18:07 PM

A property was sold, and the proceeds were distributed in cash to the beneficiaries as per a will and state law.

Level 15
Mar 12, 2025 1:23:34 PM


@Arcia 27 wrote:

A property was sold, and the proceeds were distributed in cash to the beneficiaries as per a will and state law.


A cash inheritance is not reported on a tax return.

New Member
Apr 6, 2025 12:45:38 PM

My wife received $52000 from her mother in-laws estate, which we received a1099-R for, do I need to put this in my tax return?

Level 15
Apr 6, 2025 1:31:17 PM


@Tireman1999 wrote:

My wife received $52000 from her mother in-laws estate, which we received a1099-R for, do I need to put this in my tax return?


Yes, the Form 1099-R has to be reported on your federal tax return.

 

To enter, edit or delete a form 1099-R -

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Retirement Plans and Social Security
On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button

New Member
Apr 9, 2025 7:53:50 AM

My father died in March of 2024.  I received a check  in the Spring of 2024 which I have been living off since then, and a larger sum went to an investment company who has been investing it for me at their discretion.  I was also working for room and board and $50 or less per week from mid November, 2023 to early July of 2024.  The inheritance came from the sale of my father's house and I believe the check came from his life insurance.

 

New Member
Apr 9, 2025 7:57:06 AM

My father died in March 2024.  I received a check in the Spring which I have been living off since and a larger sum went to an investment firm that has been investing it for me at their discretion.

Expert Alumni
Apr 9, 2025 8:04:36 AM

Did you inherit the house and then sell it?  If so, then yes, you would need to report the sale of the home on your taxes. 

 

 Or did it go to an estate and then you are getting money from the estate?



Life insurance is generally not taxable income.  However, if there is an investment company handling it and this money is earning money, then any profit from the investment that you received is taxable. 

It sounds like you may also have income from self-employment that will need to be reported on your return.  To enter your self-employment income select the following:

  1. Federal
  2. Income and Expenses
  3. Show More next to Self-Employment
  4. Start next to Self-Employment
  5. Yes, to you have any self-employment income or expenses
  6. Enter the type of self-employment work you do and you can select that you use your name for your business
  7. Click through a few more screens and you will get to a screen that says "Your XX info"
  8. Click Looks good
  9. Then you will come to a screen that says Let's enter the income for your business.  It will give you the option of 1099-NEC or Other self-employed income including the 1099K , cash and checks.  Here is where you will enter the money you receive.
  10. If you do not select one, it will not let you enter your income
  11. Enter your self-employment income on the next screen
  12. Continue and on the next screen click add expenses

* Please note navigation may differ slightly depending on which version of TurboTax you are using*

 

This income will be reported on Schedule C which is part of your overall tax return. This also means you will be subject to SE Tax.  If you did not pay SE Taxes in 2024, and if you plan to do this again in 2025, it may be a good idea to make  quarterly estimated payments to cover your SE taxes of 15.3% and avoid penalties.

 

 

How Can I Protect My Inheritance From Taxes?

 

If there is an investment company handling your inheritance, it may be a good idea to upgrade to TurboTax live so you c can discuss your situation in greater detail and they can help you with your return.