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inherit cash...how taxed? #13226083 07/26/19 02:10 PM
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tds Offline OP
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If you receive inheritance from cash, IRA, or bank,
is it taxed as ordinary income or is there a special rate for inheritance tax?

Thanks.

Re: inherit cash...how taxed? [Re: tds] #13226085 07/26/19 02:12 PM
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SgtDag Offline
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I don't know but I do know you can give your wife up to $30K in a one time only tax free gift.


"If you're going through hell keep going." Winston Churchill

Originally Posted by 1ShotNoKills
I open mouth kiss my sisters
Re: inherit cash...how taxed? [Re: tds] #13226089 07/26/19 02:14 PM
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DI Offline
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Pretty sure it has to be over 5mm, otherwise screw the gooberment

Re: inherit cash...how taxed? [Re: tds] #13226095 07/26/19 02:18 PM
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rj74955 Online Content
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I'm pretty sure you can give all family members a tax free gift amount, cuz.

Re: inherit cash...how taxed? [Re: tds] #13226102 07/26/19 02:23 PM
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PondFish Offline
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Hey Zeke, is there a quick and easy answer?

Re: inherit cash...how taxed? [Re: tds] #13226112 07/26/19 02:29 PM
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Floon Swenson Offline
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Originally Posted by tds
If you receive inheritance from cash, IRA, or bank,
is it taxed as ordinary income or is there a special rate for inheritance tax?

Thanks.


It totally depends on who you are inheriting them from. Is it a non-spousal inheritance?

Re: inherit cash...how taxed? [Re: tds] #13226125 07/26/19 02:42 PM
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pchapin Online Content
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IRA will be different from most anything else you inherit.
https://www.fidelity.com/retirement...egn8EAAYASAAEgJ92vD_BwE&gclsrc=aw.ds


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Re: inherit cash...how taxed? [Re: pchapin] #13226132 07/26/19 02:47 PM
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gander Offline
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Originally Posted by pchapin
IRA will be different from most anything else you inherit.
https://www.fidelity.com/retirement...egn8EAAYASAAEgJ92vD_BwE&gclsrc=aw.ds
It depends on what type of acct it is coming from. My understanding straight out of a savings/checking or cash there is no tax unless it is in the millions. I am going thru this now with an estate. Some IRA's are taxable unless you roll them over some are not. Our tax laws are way to complicated for sure.

Re: inherit cash...how taxed? [Re: Floon Swenson] #13226138 07/26/19 02:54 PM
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gander Offline
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Originally Posted by Floon Swenson
Originally Posted by tds
If you receive inheritance from cash, IRA, or bank,
is it taxed as ordinary income or is there a special rate for inheritance tax?

Thanks.


It totally depends on you are inheriting them from. Is it a non-spousal inheritance?
I received an inheritance a few years back from an out of state relative (uncle). The estate had to pay taxes to the state (Iowa). I had no tax liability what so ever. A lot depends on what type of acct it comes from and if it is out of state or in state.

Re: inherit cash...how taxed? [Re: PondFish] #13226139 07/26/19 02:54 PM
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Originally Posted by PondFish
Hey Zeke, is there a quick and easy answer?


No. Sort of. It depends. Does OP mean inheritance from a deceased person, or a gift from a living person? If deceased, what state does the recipient live in? Was the estate larger than $11.4 million?

Texas does not have an inheritance tax, and Federal estate tax only kicks in above threshold amounts (in 2019, the $11.4m above).

The short general answer is that an inheritance is a "gift" under IRS rules, and is normally not considered income. Therefore, it isn't taxable, but there are some exceptions. IRA's and real estate have some twists to them and get handled differently than a simple bank account or cash gift.


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Re: inherit cash...how taxed? [Re: tds] #13226143 07/26/19 02:56 PM
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Does it work the same if you get it from a Nigerian Prince?



Re: inherit cash...how taxed? [Re: gander] #13226146 07/26/19 02:59 PM
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Originally Posted by gander
Originally Posted by Floon Swenson
Originally Posted by tds
If you receive inheritance from cash, IRA, or bank,
is it taxed as ordinary income or is there a special rate for inheritance tax?

Thanks.


It totally depends on you are inheriting them from. Is it a non-spousal inheritance?
I received an inheritance a few years back from an out of state relative (uncle). The estate had to pay taxes to the state (Iowa). I had no tax liability what so ever. A lot depends on what type of acct it comes from and if it is out of state or in state.


There is a lot to it for sure. An IRA gets different treatment if RMD's had begun versus someone that hadn't reached 70.5 years old, for example.

Re: inherit cash...how taxed? [Re: tds] #13226152 07/26/19 03:06 PM
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I received an inheritance from a deceased relative who resided in the state of New York and I never paid any tax on it and my taxes are done by a CPA so I trust it was all legal.


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Re: inherit cash...how taxed? [Re: tds] #13226159 07/26/19 03:12 PM
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Zeek is correct on the Federal, tax-free inheritance amount of $11.4 million (for the 2019 tax year). As for "gifts" the 2018 and 2019 limit is $15,000/person tax-free. So if you and your spouse have four kids, you could each give them $15,000, so $120k gifts to your kids would be tax free. If you need more exact info and guidance, consult a Family Estate, Trust and Probate attorney.


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Re: inherit cash...how taxed? [Re: Floon Swenson] #13226160 07/26/19 03:15 PM
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Originally Posted by Floon Swenson
Originally Posted by tds
If you receive inheritance from cash, IRA, or bank,
is it taxed as ordinary income or is there a special rate for inheritance tax?

Thanks.


It totally depends on who you are inheriting them from. Is it a non-spousal inheritance?


I think I kind of went down a road toward an answer to a question you never actually asked. You were specifically asking about taxes. I was answering a question about how the inheritance gets treated, and in that I was looking at that IRA. The cash in the bank is easy peasy. The IRA is where the complication comes in...which isn't all that complicated, but it gets handled differently in different situations.

Any full service financial advisor handles inherited IRA's on a daily basis, whether through the planning process or executing the transfers when a client dies. It is everyday business. Go see one to make sure you're doing what you need to be doing.

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