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    silvernel's Avatar
    silvernel Posts: 1, Reputation: 1
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    #1

    Jun 23, 2008, 09:47 PM
    Taxes on inherited money
    I recently inherited some oil royalities when my mother passed away (just a little over $10,000) How do I list this on my tax form and do I pay taxes on the whole amount.
    This is a one time payment. Thanks for any info silvernel
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Jun 24, 2008, 08:02 AM
    You do not owe any taxes on yor inheritance. There is no federal inheritance tax, and only a few states still have an inheritance tax. If any taxes were due, they would have been estate taxes (not inheritance yaxes) and would have been paid out of the assets of the estate by the executor. Post back with the state you live in and we'll be able to verify that no inheritance taxes are owed your state.
    tklouny's Avatar
    tklouny Posts: 1, Reputation: 1
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    #3

    Nov 9, 2012, 11:02 AM
    My adult children live in Michigan, Kentucky and Missouri. They have been left a small inheritance from an IRA distribution by their Grandparents of $2,000 each.

    There was no taxes taken out by the estate... Do they owe taxes on this money for 2012.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #4

    Nov 9, 2012, 11:14 AM
    Maybe. If the money was a distribution from the IRA, then the portion that is attributable to any pre-tax contributions by the grandparents and earnings in the account is taxable, but any portion attributable to after-tax contributions is not. Also, if the account was a Roth IRA as opposed to a traditional IRA then no income tax is due. The IRA cusodian should be able to provide the specifics, and will provide a form 1099-R in January to dicument te taxable portion of the distribution.

    Another alternative is the heirs could decide to keep their portion of the IRA as an inherited IRA, in which case no taxes are due (at least not immdiately), but the rules for an inherited IRA requre that a small amount be withdrawn each year, and that amount is taxable. Quite frankly if the IRA value is only $2000 for each child I wouldn't bother with this option.
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