Inheritance tax question

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SooperDave

SooperDave

Senior member
Nov 18, 2009
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So I just received an inheritance from a revocable family trust. I googled around trying to figure out the tax liability and the answers are inconclusive. Is it the same as income? I am in California and the amount was 5K. Help me tax gurus!
 
Whoozyerdaddy

Whoozyerdaddy

Lifer
Jun 27, 2005
19,216
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When faced with a complicated legal situation ATOT should always be your first option for advice. Period.

Fuck the lawyers. What do they know?
 
olds

olds

Elite Member
Mar 3, 2000
50,124
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Send the money to be. I'll send you a check for $7500. Then you'll have your 5k and you can use the remaining 2.5k to pay the taxes.
 
I

iGas

Diamond Member
Feb 7, 2009
6,240
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Google is your friend.

CA has no inheritance/death tax, as it follows the federal death tax laws which is none.
 
CPA

CPA

Elite Member
Nov 19, 2001
30,322
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Inheritance falls under the Uniform Estate and Gift Tax (Unified Credit) rules. It is taxable to the "giver", or in this case the estate, not the recipient. Most states follow the federal laws.
 
SooperDave

SooperDave

Senior member
Nov 18, 2009
615
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iGas said:
Google is your friend.

CA has no inheritance/death tax, as it follows the federal death tax laws which is none.
Click to expand...

That is what I was coming up with too. I'm just having a tough time believing the State will let me reap that kind of windfall without trying to grab a big chunk of it. I plan on setting the money aside and waiting until after I file taxes to do anything with it. If I get to keep it all then all the better.
 
I

iGas

Diamond Member
Feb 7, 2009
6,240
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SooperDave said:
That is what I was coming up with too. I'm just having a tough time believing the State will let me reap that kind of windfall without trying to grab a big chunk of it. I plan on setting the money aside and waiting until after I file taxes to do anything with it. If I get to keep it all then all the better.
Click to expand...
Good idea.

An additional 5K in investment would be nice in the current market trend (energy oil/coal, metal making minerals, and rare earth).
 
CPA

CPA

Elite Member
Nov 19, 2001
30,322
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SooperDave said:
That is what I was coming up with too. I'm just having a tough time believing the State will let me reap that kind of windfall without trying to grab a big chunk of it. I plan on setting the money aside and waiting until after I file taxes to do anything with it. If I get to keep it all then all the better.
Click to expand...

You obviously did not see my post: The feds and state collect the tax, if due, from the giver not the recipient.
 
J

JS80

Lifer
Oct 24, 2005
26,271
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81
SooperDave said:
That is what I was coming up with too. I'm just having a tough time believing the State will let me reap that kind of windfall without trying to grab a big chunk of it. I plan on setting the money aside and waiting until after I file taxes to do anything with it. If I get to keep it all then all the better.
Click to expand...

I don't think you get it. When the dead person gives you $1 million, the dead guy has to pay $1 million to the government (for example). It's like giving you $2 million and you paying $1 million (in the case of 50% inheritance tax). Same scheme but tries to put a wool over your head.
 
Dr. Detroit

Dr. Detroit

Diamond Member
Sep 25, 2004
8,539
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kranky said:
I think JulesMaximus' point is that lawyers don't know tax laws... at least to the extent that a CPA does.
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BS! Tax lawyers know more know than CPA's and I'm a CPA!

But yes - the Estate pays the tax - not the recipient but 2010 is a weird year with absolutely zero estate taxes owed to the FED's regardless of amount. In 2009 it was taxable at 45% for anything over $3.5M.
 
kranky

kranky

Elite Member
Oct 9, 1999
21,019
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Fmr12B said:
BS! Tax lawyers know more know than CPA's and I'm a CPA!

But yes - the Estate pays the tax - not the recipient but 2010 is a weird year with absolutely zero estate taxes owed to the FED's regardless of amount. In 2009 it was taxable at 45% for anything over $3.5M.
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Agreed, but unless someone says "tax lawyer" I think it's safe to say they mean "generic lawyer".
 
C

Craig234

Lifer
May 1, 2006
38,548
350
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kranky said:
Agreed, but unless someone says "tax lawyer" I think it's safe to say they mean "generic lawyer".
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Not in a thread where the context is 'what are the tax issues on inheritance'.

It goes up to 55% - ON THE PORTION OVER IIRC $5 million. Still zero for 98%+ of people.
 
ebaycj

ebaycj

Diamond Member
Mar 9, 2002
5,418
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SooperDave said:
So I just received an inheritance from a revocable family trust. I googled around trying to figure out the tax liability and the answers are inconclusive. Is it the same as income? I am in California and the amount was 5K. Help me tax gurus!
Click to expand...

Unless it's into the millions, you probably don't have to pay taxes.

But ask a lawyer or tax accountant.
 
dullard

dullard

Elite Member
May 21, 2001
26,066
4,712
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oldsmoboat said:
IIRC, it's about to go to 55%
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To be quite technical, it is always 0% for the person who gets it. By the time you get money, the taxes (if any) should have been paid.

In other words, SooperDave probably doesn't have to worry.
 
dud

dud

Diamond Member
Feb 18, 2001
7,635
73
91
SooperDave said:
So I just received an inheritance from a revocable family trust. I googled around trying to figure out the tax liability and the answers are inconclusive. Is it the same as income? I am in California and the amount was 5K. Help me tax gurus!
Click to expand...



OP, unfortunately I have experience in this arena.

State: If CA has no inheritance tax then no, no state tax.

Federal: $5K is well below the threshold for inheritance taxes so no taxes EXCEPT under specific circumstances. Did this money come from any sort of a deferred-tax (as in IRA) retirement investment? If so then it has not yet been taxed and is subject to income taxes. If it came from a Roth you are OK.
 
M

mshan

Diamond Member
Nov 16, 2004
7,868
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You might want to see if you should just fill out the gift tax form with taxes this year (you are just claiming a small portion of your total lifetime exemption).

I think you are supposed to be able to get up to $11000 or $12000 (forgot what current limit is) from any person per year without having to report it.

Like others said, it sounds like you need to find out whether giver already paid taxes on those funds or not.
 
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