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

[Tireman1999]

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?

[DoninGA]

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@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?

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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

[ajfreund]

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.

[ajfreund]

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.

[Vanessa A]

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.