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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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I received an inherited IRA 10 years ago and I'm being told

Customer Question

I received an inherited IRA 10 years ago and I'm being told that I needed to have reported that to the state of PA and pay inheritance tax on it but my understanding is that taxes are only to be paid on the required minimum distributions that are taken each year
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: its from my dad when he passed away 10 years ago
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

Inheritance tax and income tax are different taxes. Inheritance tax is paid on fair market value of the asset you inherit. This include fair market value of a house, boat, car, checking account or retirement account. There's no inheritance tax on federal level, but there are still handful of states with inheritance and/or estate tax. Unfortunately PA is one of them and it should have been reported 10 years ago.

When you take the minimum required distribution, the distribution will be included in your taxable income and subject to income tax at federal and maybe on state level as well, depending if you still live in PA or not. Currently PA does not tax any retirement income.

Expert:  emc011075 replied 1 year ago.

Any questions?