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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4184
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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is money i inherited taxable? is this inheritance affect my

Resolved Question:

is money i inherited taxable? is this inheritance affect my ssi,food stamps and other benefits iam getting right now?
Submitted: 2 years ago.
Category: Tax
Expert:  Stephen G. replied 2 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

Generally no, it isn't taxable income to you, but tell me more about the specifics.

Stephen E. Grizey :

Certain things are taxable, for example IRA accounts.

Customer:

well its not me its my mom

Customer:

she received an amount of money from her dad...

Customer:

she is disabled and she just received a 1099r form

Stephen E. Grizey :

Any benefits that are income based should not be affected. Certain benefits consider assets in terms of eligibility and depending upon the amount, they could be reduced or eliminated.

Stephen E. Grizey :

What is the 1099-R for and how much is it?

Customer:

she is affraid that she is going to lose her benefits...ex...food stamps and ssi money and the cash she recieves..

Stephen E. Grizey :

That sounds like taxable income, so her taxable income will be affected.

Customer:

its an annuity her father left her...for 14490 dollars...

Stephen E. Grizey :

She is probably right, depending upon the amount involved.

Stephen E. Grizey :

When did she receive it?

Customer:

last year...

Stephen E. Grizey :

when

Customer:

cant remember around june,july...

Stephen E. Grizey :

What did she do with it, if you know?

Customer:

she still has about half of it somewhere...the rest she spent it...she says in box 2a of the form says taxable amount of 7000...

Stephen E. Grizey :

Oh, well that's not so bad; it may not be enough to cause any problem; if she doesn't have any other income she very well may not even have to file a tax return;

Customer:

she doesnt care about paying taxes for it she is affraid that she is going to loose the ssi income and her food stamps and i think she receives something else in money.im not sure what it is

Customer:

her only income is from the government...

Stephen E. Grizey :

The reason I asked what she did with it, is that when she received it, it may have been possible to file a "disclaimer" and then the money would have gone to the next in line, you & whomever else is in line for the inheritance; that would have avoided any issue with respect to her taxable income; a disclaimer basically means that she refused the money (you can't force someone to take an asset).

Customer:

oh wow i wish i would have known that or they would have explained that to us...

Stephen E. Grizey :

Well, someone will have to figure out if she needs to file a tax return based upon the taxable income she received. It isn't the tax that I'm talking about -- that will be minimal in any case -- it is the benefits;

Customer:

so will this affect her benefits...?

Stephen E. Grizey :

If by "they" you mean whoever paid the benefit -- an insurance company -- they would have no way of knowing that situation would apply to your mother.

Stephen E. Grizey :

It could, at least for a short period of time; if she isn't required to file a tax return, at some point she will have to report her income to the agency administering the programs. Technically, she was probably required to do the reporting when her circumstances changed.

Customer:

what if she never does...

Customer:

report this income^

Stephen E. Grizey :

well it depends what her total income is; the if the IRS receives 1099s that apparantly requires her to file a tax return, she will get a notice and possibly a bill; the social security administration will get notified & she could have to pay back some of her SSI. This is all speculation without knowing the facts; there are some exemptions to the benefit reductions;

Customer:

do these administering agencies have a way of knowing even if she files a tax return?

Customer:

ok so how does she knows if she has to file? because she already received the form 1099R...

Stephen E. Grizey :

it depends, it takes a while for any of that to unfold; the problem really is that when she fills out or updates her information, she has to disclose these things; if she doesn't do that, it's a problem; she may not even consider leaving information out of such a report & I wouldn't suggest or recommend it;

Stephen E. Grizey :

well you mentioned she receives other "government money"; depending upon what that is, ie. how much it is, you can determine what her tax filing requirements are, if any.

Customer:

well ever since she been recieving her ssi and whatever else she receives she hasnt filed a tax return.that has been for like 11 years now...

Customer:

she receives the w-2's but was told she didnt have to file so she just doesnt...

Customer:

hello

Stephen E. Grizey :

Sure, but now you have to add the 7K to everything & that probably will change things

Customer:

ok but just the 7k not the whole amount which was 14500....right?

Stephen E. Grizey :

Right, whatever is indicated as taxable; the difference is what her father would have invested in the annuity

Customer:

ok thats what i thought...but it would only affect for that amount which i think is what the annuity earned...correct/

Stephen E. Grizey :

as far as her income tax return is concerned, yes; the total appears on the tax return, I think it is on line 14(a) and then on 14(b) you enter the taxable amount;

Customer:

so in other words...she is probably will be affected by the 7k...but they wont stop her social security money and the SSI forever...and even the food stamps...which is my concern...

Stephen E. Grizey :

not forever; hard to tell without the actual numbers

Stephen E. Grizey :

Please remember to "ACCEPT". Feedback, if you have time & bonuses where you think they are warranted are always most appreciated. I'll be happy to answer any follow-up questions you may have.

Customer:

another quick question can you claim a child that was born this year in the tax return?

Customer:

hhhh

Stephen E. Grizey :

this year? what year are you talking about?

Customer:

well he was born on january this year..

Stephen E. Grizey :

if you are talking about 2012, he can be claimed in 2012 not 2011

Customer:

oh ok...

Customer:

ok thanks...

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4184
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 5 other Tax Specialists are ready to help you

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Stephen G.
Stephen G.
Sr Financial & Tax Consultant
3649 Satisfied Customers
Extensive Experience with Tax, Financial & Estate Issues