Have a Tax Question? Ask a Tax Expert
Hi Albert and welcome to our site!For INCOME tax purposes inheritance is not taxable income in the US regardless the amount - as a recipient of inheritance you do not need to claim it as income. However....Please be aware that while inheritance itself is not taxable - distributions from retirement accounts (including death benefits) are classified as income is respect of the decedent (IRD) and as such is taxable.
Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that was not properly includible in the decedent s final income tax return. Income in respect of a decedent realized AFTER the death is taxable the same way as it were taxable decedent.
So - distribution from inherited IRS is taxable income.The tax rate is based on your total income - the amount distributed is added to other taxable income and depending on total income, filing status, deductions, etc - the tax liability is calculated.There is no penalty for distributions from inherited IRA regardless of your age.
I appreciate if take a moment to rate the answer.
Experts are ONLY credited when answers are rated positively.
If you still have any doubts, need clarification - please be sure to ask.I am here to help you will all tax related issues.