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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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If I receive an inheritance from an uncle, do I have to pay

Customer Question

If I receive an inheritance from an uncle, do I have to pay federal taxes?
Submitted: 8 years ago.
Category: Tax
Expert:  RD replied 8 years ago.

Inheritance is not subject to federal tax. Depending on the State your uncle was a resident, you may be subject to State inheritance tax.

 

Also, if the inheritance is distribution from a tax deferred account such as IRA or 401K or similar accounts than it may be subject to income tax.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

Customer: replied 8 years ago.
My uncle lived in Florida, and I live in Massachusetts. Do I have any state income tax liability?
Expert:  RD replied 8 years ago.

Florida does not have an inheritance tax or State income tax. So if the property you inherited is located in FL, you do not owe any inheritance tax.

 

As long as the inheritance is not a distribution from a tax deferred account, you do not have a income tax liability.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

RD and 2 other Tax Specialists are ready to help you
Customer: replied 8 years ago.
If the money did come from tax deferred accounts, do I add this as income or is there a flat percentage rate?
Customer: replied 8 years ago.
I'm new at this, so please excuse my ignorance. Am I still waiting for a reply to my third question in our dialogue?
Expert:  RD replied 8 years ago.

If your income did come from tax deferrred accounts than this would be taxed in the same manner as it would to the decedent had he taken the distribution.

 

If this is a regular IRA or 401K account than entire distribution will be reported as income. Note that since this is a distribution pursuant to death of the account holder the additional 10% early withdrawal penalty would not apply.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.