What about inheritance that is coming from annuities and ira's? In california- is it concedered income tax or seprate all together?

If you inherit a traditional IRA, you are called a beneficiary. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. All income in a traditional IRA is taxed as ordinary income. Any capital gains within the IRA receive no special treatment that is it is treated as an ordinary gain.

You can withdraw money from inherited IRA without early withdrawal penalty even before you are 59 1/2. You should receive a Form 1099R from the trustee for the IRA. Get a copy of it from the trustee if you no longer have it. Usually there is federal withholding on the distribution, most often 20%.

I my wife and her siblings have inherited their mothers house and are going to sell it then divide the money is that money they gat taxable or is it an inheritance?

Thnak you

Alan

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Originally Posted by alluran

I my wife and her siblings have inherited their mothers house and are going to sell it then divide the money is that money they gat taxable or is it an inheritance?

Thnak you

Alan

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They inherited a house - so that's not income, it's inheritance (and not taxed in CA). The cost basis of the house for tax purposes is set to the fair market value of the property as of the date of death of the decedant.
Later when they sell the house if the proceeds are greater than the cost basis then they have a capital gain on the difference, and that gain is reported as capital gain income on their tax returns. If the proceeds are less than the cost basis then they have a loss, which unfortunately can't be deducted from income tax.