I have a question about reporting inheritance. I inherited two bank accounts and part of a mutual fund when my father died. The estate still isn’t settled, but I’ve received the money. Is inheritance taxable income?
Regarding your question: Is inheritance taxable income, no, you usually don’t include your inheritance in your taxable income. However, if the inheritance is considered income in respect of a decedent, you’ll be subject to some taxes.
Reporting inheritance income in respect of a decedent includes gross income items that would have been taxable to the deceased person. However, these items weren’t included on the final return. The items include:
- Employee compensation
- Bonuses
- Benefit plan distributions
- Partnership income
- Interest and dividends
- Gain on sale of property
- Crops and livestock
- Installment obligations
- Royalties
If you received one of these, you must report it as income. Report it the same way the deceased person would have reported it.
However, if the estate reported the income in respect of a decedent, you don’t need to report it as income.
Related Resources
Is your work-study income considered taxable by the IRS? Learn more from the tax experts at H&R Block.
If you report income earned in a nonresident state on your resident and nonresident return, will you be double-taxed? Learn more from the tax experts
What is a capital gain or loss, and how do they affect your taxes? Learn more from the tax experts at H&R Block.
Many entrepreneurs find themselves wondering exactly how Bitcoin is taxed. Our H&R Block Tax Pros are prepared to assist self-employed filers with Bitcoin taxation.
