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Do you have to pay taxes on a cash inheritance

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Pearls59

Asked by Pearls59 at 2:08 PM on Jun. 3, 2011 in Money & Work

Level 1 (2 Credits)
Answers (12)
  • I've heard YES but I'm not for sure? If it's true, that's just wrong!
    anichols1

    Answer by anichols1 at 2:11 PM on Jun. 3, 2011

  • Yes. It's considered an income. You have to claim any and all winnings, earnings, inhertiances, profits, etc.
    Anonymous

    Answer by Anonymous at 2:13 PM on Jun. 3, 2011

  • Yes, you will, the minute you cash out.

    If the money is in a retirement account, leave it in there! You can take out distibutions, tax-free, but there is a set amount of time that you can have the cash in your hands before rolling it over.

    If it is just cash, it will probably have to go through the probate court.
    ImaginationMama

    Answer by ImaginationMama at 2:25 PM on Jun. 3, 2011

  • You have to claim it on your taxes but you will end up not paying for any of it. I got an inheritance of about $100,000 and put it on my taxes and STILL got a refund.
    Anonymous

    Answer by Anonymous at 2:31 PM on Jun. 3, 2011

  • Talk to a financial adviser on the best way to handle this. They will be able to give you tips on how you can make the most of that money
    MrsDAP

    Answer by MrsDAP at 2:37 PM on Jun. 3, 2011

  • I had to pay on my bio dads 401k he left to us. We paid no taxes on the sizable life insurance he left to us.
    Anonymous

    Answer by Anonymous at 2:38 PM on Jun. 3, 2011

  • Anything gift or inheritance over $16,000 is taxable.
    meooma

    Answer by meooma at 4:28 PM on Jun. 3, 2011

  • The current Federal estate tax is on anything over 3.5 million.
    Keksie

    Answer by Keksie at 4:56 PM on Jun. 3, 2011

  • You shouldn't. Say you get an inheritance, the person giving it pays the taxes. Now if you inherit a retirement account... say a 401k, those can if you are spouse roll over into your name. Now say you cash that out. Then yes you would owe taxes. But it's not an inheritance tax, it's an early withdrawal tax. Two very different things.

    Someone that dies with a million dollar estate might owe some in taxes before it can pass on to you, and that can feel like you are paying the taxes- say you only get $900,000 instead of the full million- but technically you didn't pay it, the estate did.

    I can't remember what the % is. And up to $13,000 (is it $16,000 meooma?) should not be taxed. So as long as it's not more than that you should be fine.

    Wow this is long...
    Erica_Smerica

    Answer by Erica_Smerica at 5:39 PM on Jun. 3, 2011

  • I'd ask my accountant.
    tasches

    Answer by tasches at 9:36 PM on Jun. 3, 2011

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