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Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3152
Experience:  EA, CEBS - 35 years experience providing financial advice
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I inherited approximately $80,000 from my mother and just ...

Customer Question

I inherited approximately $80,000 from my mother and just received a 1099-R statement from the administrator of the fund. Do I have to pay income taxes on this money?
Submitted: 8 years ago.
Category: Tax
Expert:  Bill replied 8 years ago.
Yes, you are required to pay taxes and include this amount on your tax return unless the funds were from a retirement plan and they were moved to an inherited IRA. If the funds were from an IRA, then the amount should be entered on line 15 of the 1040. If the funds were from a 401(k), pension, 403(b), or nonqualified annuity then you would enter the amount on line 16.
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Customer: replied 8 years ago.
thank you, XXXXX XXXXX accept your answer; however, I need to what you mean by "unless the funds were from a retirement plan (they were) and they were moved to an inherited IRA - what is an inherited IRA?
Customer: replied 8 years ago.
I'm not sure how this works. Do I need to accept your answer before you can answer the further question I asked?
Expert:  Bill replied 8 years ago.
If the distribution was from a 401(k) or pension plan and was directly rolled over to an inherited IRA (individual retirement account) then it is not a taxable event. You would then have an IRA titled with your name as beneficiary of your mother's IRA. If however, you received a check for the distribution then it was not directly rolled over to an inherited IRA. If it had been rolled over to an IRA, then there would be $0 in box 2a of the 1099-R and a "G" in box 7.

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