Inheritance - Fed/State Tax Question

[Murpheeee]

My wife's mom passed away a few weeks back.
She is currently going through all the legal process with the will and stuff.

She would like to use the money she inherits as downpayment on a house.
Neither of us have ever been through this before and I am a little concerned as to how inheritance is handled when it comes to tax time.

I don't want to put all the money into a house deposit now, then find in 4 months, I am hit with a huge tax bill when I file my return.....

Anyone know what the deal is here?

 

[kranky]

Check the IRS site to be sure, but usually money you get from an inheritance isn't taxable to you.

 

[Kayes]

dunno about this but did you watch shawshank redemption when Andy advise the head warden to give his inheritance to his wife as gift to avoid tax. maybe you will want to check out this whether is it still valid?

 

[BrunoPuntzJones]

<< but usually money you get from an inheritance isn't taxable to you. >>

ever heard of the inheritence tax? 😛


<< dunno about this but did you watch shawshank redemption when Andy advise the head warden to give his inheritance to his wife as gift to avoid tax. >>

i havent seen the movie, but by going by what you said, she should give the money to him as a gift? this wouldnt work. only 10k of the money he gets is non taxed, but she still has to pay any taxes incurred when she received it. if the mother is already dead it is too late to change the will and make it a gift.

this is what my grandmother has thought of doing. give the kids 10k a year, as a tax free gift. give the grandkids 10k a year as a tax free gift. each grandkid gives the parent that 10k as a gift tax free. this way the parent can collect 30k (however many kids) a year instead of only 10k. this isnt being done yet, gotta make sure it's tax minimization and not evasion.

how much was the inheritence? anything over 1 mil the gov gets 50% of. what's really bad is, iirc, that taxes are due in 90 days. so if she has a bunch of land and fixed assets, you have to pay tax on that big ass house you inherit. no where you gonna come up with $50,000 in taxes for that house? and that becomes due in 90 days. so the only way you can pay your taxes on time is to sell the house, below fair value. sucks 🙁 that may not be a problem, just an example. good thing they are looking at changing the rules.

 

[kranky]

BrunoPuntzJones, some states have an inheritance tax, others don't. The Federal tax is on the estate (so the estate pays the tax) and only on the amount exceeding $675,000. The marital deduction gives people even more room. So even if the estate is subject to the estate tax, I believe my statement is correct. The money he receives isn't taxable to HIM. Any tax due would already be paid out of the estate, NOT by the people who inherit (with the exception of any state tax that might be due).

 

[Amused]

Just walk into the IRS office and bend over.

They'll take care of the rest.