I received an inheritance from my father from his Bear Stearns account. It was divided among 5 siblings. I am married, but do not work. My husbands gross amt for the year was 36,500.00. Do I need to file this separately or does it get included with our income on our 1040. Also I paid 20% in taxes on that money already. Will I see any of that back. Thank you so much for any help. Debbie

The money from the Bears Stearns account is from an IRA or 401K. You are NOT paying inheritance tax, you are paying income tax.

Traditional IRAs are funded with before-tax dollars. The IRA grows tax-deferred, NOT tax-free. That means that, when the money is finally distributed, income taxes must be paid, either by the original owner or his heirs, in this case YOU!

You will get a Form 1099-R that reports the distribution and the withheld taxes. It needs to be included on your tax return on Lines 15a and 15b.

Fortunately, because it is a inherited IRA, you will not have to pay the 10% Early Withdrawal Tax.