My mother and father died a few months ago. I inherited an IRA account with four other sibblings. The money was disbursed to the estate and was deposited into a joint account. Will we have to pay taxes on this or is it tax free. The account is in a separate state than the state that we live in?

Hi, confulsed!

Greetings and WELCOME to the site! I'm so sorry about your loss! I just moved your question that you had posted in Introductions to this topic area so that it would get the most exposure to those who are best able to answer it.

It will get noticed more in this topic area then it would have where it had been placed. Introductions is for people to introduce themselves and we try to not ask questions there.

We would appreciate it if you would return to Introductions sometime to tell us a little about yourself though, if you would be willing to do that.

Again, I'm so sorry for your loss! In case you would like any help with dealing with your loss and grieving, there would be some very caring and wonderful people in the following topic area that can be accessed via the following link

https://www.askmehelpdesk.com/bereavement/

Thanks!

Confulsed:

I assume that the IRS in question is a traditional IRA that was funded with pre-tax money.

If so, the money disbursed from the IRA will be subject to income tax (both federal and state) in the year the recipient receives the IRA money from the estate.

For sure, the state income tax for the state in which the recipient lives will apply. The state tax for the state where the IRA was establish MAY also apply, but if that is the case, the recipient state should offer a offsetting credit for that taxes paid to the disbursing state to ensure that the money is NOT taxed by both states.

There is no tax on inheritances. So any money or property you inherit, there is no tax.
However, if you inherit Trad IRA, you must include the amount withdrawan in your income.
Read: Your U.S. Tax Return: Tax on Inheritances