OK so I'm getting ready to file taxes, and I'm wondering if some money I inherited from a relative in 2010 will come up. It's not a huge sum (around $15,000), so I'm not sure if it's subject to taxation. I know estate taxes only affect folks inheriting millions or more.
Anyway...thanks in advance for any help you can provide.
Unfortunately I have personal experience with this. No taxes are due on inheritance. Any taxes that would have been due would have been taken out of the estate itself, before money was distributed to any heirs. The heirs themselves don't have to pay anything.
The estate tax in 2010 was 0%....no death tax. Now 2011 would be another story.
Sorry for your loss.
At the federal level (IRS), an inheritance is not taxable income. Also, estate taxes (death taxes) are paid by the estate, not the beneficiary, so you should be in the clear. I believe this would be the same result in all states as far as state taxes are concerned.
Estate taxes do exist an d the heir pays for it. Only, he pays for it before it ia distributed, but it is still been paid by him because once his relative dies, it is his money, even though he has no posesion yet.
But for estates to be taxable at the federal level, the estate has to be over 2 million (more or less).
Your State might be a different story.