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MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Im looking for best ways to avoid tax liability with an inheritence

Customer Question

I'm looking for best ways to avoid tax liability with an inheritence and still have partial liquid funds to pay off debt.
Submitted: 5 years ago.
Category: Tax
Expert:  MequonCPA replied 5 years ago.
Hi and welcome to JustAnswer:

Generally speaking, there is no income tax liability on funds received as an inheritance. Any estate taxes are paid by the personal representative prior to making distributions. The major exception to the rule is if the funds come from a retirement account. In that case, the amounts are likely to be taxable at your incremental tax rates.

Depending on which state you live in, you may be subject to state inheritance taxes.
Customer: replied 5 years ago.

Will estate tax affect my AGI in NC?

Expert:  MequonCPA replied 5 years ago.
Unless the estate value exceeds $5 million there is no estate tax. Estate tax will not affect your AGI.

If the funds are from a retirement plan, and if they were included in a taxable estate, you will be entitled to an itemized deduction for estate tax paid on "income received by decedent" (IRD)