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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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My mother died this year in July without a will. However, prior

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My mother died this year in July without a will. However, prior to her death she put several retirement accounts of hers, in my name as the primary holder. Do I have to report this money? Also can I claim any money spent on funeral expenses on my taxes?
Submitted: 6 years ago.
Category: Tax
Expert:  Lev replied 6 years ago.

LEV :

Hi and welcome to Just Answer!

LEV :

The person may not transfer retirement accounts to another person's name. Most likely your mother added you as a beneficiary but accounts were still under her name.


Another possible option is that your mother took a full distribution from her retirement account and gifted funds to you – so you opened a new account (not retirement) and transfer funds into that account.


Please verify which option is correct or your situation is different?

Customer:

Dear Lev,

Customer:

Dear Lev,

Customer:

dear lev, The situation is that she put savings that was her retirement money into different money management accounts. they were a CD, Janus Account, and ING account. The accounts are now in my name.

LEV :

So - your mother took distributions from her retirement account and gifted the money to you - correct?

LEV :

You will need to report all earnings before your mother took distributions on her final tax return - for these you should have 1099 forms with her name and her SSN.


All earnings that were credited on your accounts – will be your taxable income – for these you should have 1099 forms with your name and your SSN. These will be reported on your tax return.

Customer:

not exactly, the money was not in retirement accounts specifically. They were just money management accounts. She didn't gift the money to me, she just put the accounts into my name as the primary holder instead of the beneficiary. plus, can I claim any of the money for funeral expenses, travel, cremation? Thanks

LEV :

The issue is when you became the owner of the money. If you became the owner when your mother was alive - that was a gift; if you became the owner after your mother dies as a result of her death - that is inheritance. In any case that is not taxable income for you - generally, property you receive as a gift, bequest, or inheritance is not included in your income. There is no limit on the gift value you may receive.


See for reference page 34 in IRS publication 525 - http://www.irs.gov/pub/irs-pdf/p525.pdf


Gifts and inheritances. Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.

LEV :

Funeral expenses are not deductible for income tax purposes. These are only deductible for estate tax purposes - however - there were no estate taxes in 2010 neither on the federal level nor in California.

LEV :

Your only taxable income - earnings on these accounts.

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