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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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How much money can you inherit before you have to pay

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How much money can you inherit before you have to pay income taxes on the income?   We generally earn less than 100,000 jointly and inherited approx. $40,000. The reason I ask is our tax preparer told we didn't owe anything and now we have received a notice from IRS saying we owe back taxes and penalties because a K1 form was filed (we never received a copy the year we fied our taxes). I have no idea what the tax law is on this or where to turn for advice,given our history with our CPA.
Submitted: 9 years ago.
Category: Tax
Expert:  Jon Andrews replied 9 years ago.

An inheritance, by itself, is not taxable. If the money that you receive includes money that was distributed from an IRA, 401k, or similar account, that amount will be taxable. If the money you receive includes interest or dividends that were earned after the date of death of the person from whom you inherited it, that amount (the interest or dividend amount) will be taxable income.

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