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
- Benefit plan distributions
- Partnership income
- Interest and dividends
- Gain on sale of property
- Crops and livestock
- Installment obligations
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.
Trying to determine your modified adjusted gross income (MAGI)? Find out what goes into calculating modified adjusted gross income and how it’s used.
What is a capital gain distribution? Learn more about form 1099-Div Box 2A and get tax answers at H&R Block.
Learn more about reporting babysitting income on your federal taxes with help from the tax experts at H&R Block.
Form 709 is the IRS tax form that’s required in certain gift giving situations. Let the experts at H&R Block help you determine when Form 709 should be filed.