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Do I have to report income I inherited?
It depends on whether it’s inheritance tax or estate tax. Inheritance tax and estate tax are types of death taxes.
Estate tax is imposed on:
Inheritance tax is:
The estate's executor usually pays inheritance taxes. First, the executor uses assets in the deceased's estate to pay the taxes. Then, the executor distributes the estate to the heirs. So, you usually only have to pay inheritance tax if the estate earns income before it's settled. This might occur if the deceased owned income-producing investments like:
If you must pay inheritance tax, the executor usually: