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We received a $100,000 inheritance from my father-in-law ...

We received a $100,000 inheritance...
We received a $100,000 inheritance from my father-in-law this past year. Do we have to claim that as income and if so where do we claim it?
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Answered in 5 minutes by:
2/9/2007
Guru_Guy
Guru_Guy, Lawyer (JD)
Category: Tax
Satisfied Customers: 2,418
Experience: I am a lawyer who understands tax law and finance.
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Hello, and sorry for your recent loss.

The IRS does not consider inherited income to be taxable income. You do not need to report it anywhere nor to do you have to pay any taxes.

There is one important exception to this rule. If you received money from your father-in-law's IRA, 401(k) or similar tax deferred account, that would have to be treated as regular income. If that was the case, you would have received a form 1099-R that shows how much money you would have to report as miscelleneous income on your tax form.

But if you just received cash or other property that was not in any sort of tax deferred account, there is no reporting or tax requirement.

If the estate had to pay any taxes, that would have happened before you received it. Further, most estates are under the $2 million limit that applies before estate taxes start.

So the good news is that you probably get to keep it all.

I hope this helps!
Guru_Guy
Guru_Guy, Lawyer (JD)
Category: Tax
Satisfied Customers: 2,418
Experience: I am a lawyer who understands tax law and finance.
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