Do I pay Income Tax on an inheritence?
I received about $20,000 inheritence. The estate taxes have been paid in New Jersey, I reside in New York. Do I put this on either the federal or state income tax forms that I file? Are there any other issues I should address?
2 Answers from Attorneys
Re: Do I pay Income Tax on an inheritence?
The inheritance has no income tax consequences and should not appear in your tax returns.
Be cautious with your new found bounty and enjoy it.
Re: Do I pay Income Tax on an inheritence?
While Norman is generally correct, he missed one point that needs to be considered. The answer depends upon what you received. If you just got cash, he is correct. However, if you received some asset like a retirment plan, IRA, US bonds, etc., which have an income tax component (retirement plan proceeds, IRA, bonds, may represent deferred taxable income and the tax is payable by the recipient when they receive the asset). If you received shares of stock, there may be a gain or loss when they are sold, depending upon their value in the decedent's estate. Thus, the answer depends upon what you received and/or its value when you sell it.
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