Have a Tax Question? Ask a Tax Expert
Hi and welcome to Just Answer!
As a recipient of an inheritance - the person does not need to claim it as income. Regardless of the value. Please see for reference IRS publication 525 page 34 (left column)- 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.
I am confused. Do I have to pay tax, it was a trust set up to be split between me and my brother.
However - if funds are in any tax deferred account (such as IRA or 401k) - the distribution will be taxable.Neither federal nor Michigan collect an inheritance tax.Federal estate taxes are for estated with total value above $5,000,000 - so nothing for you to worry.|Michigan doesn't collect an estate tax as well - http://www.michigan.gov/taxes/0,1607,7-238-44143-156393--,00.html.
There is no tax on inheritance for you.
So since I live in Nebraska I am still not responsible for tax on the inheritance?
In the decedent lived in Michigan - estate and inheritance taxes of that state woudl apply - regardless where you live. Only if you inherited a property located in Nebraska - there will be Nebraska taxes.
Thank you very much
By the way - the Nebraska estate tax has been repealed after Jan. 1, 2007.
Your only possible tax liability woudl be if inherited funds are in the tax deferred account. Please verify.