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
Have you found yourself wondering how the IRS classifies Bitcoin? Our tax pros discuss relevant IRS Bitcoin law and notices. Learn more with H&R Block.
Understanding how to offset capital gains is a topic that many tax filers avoid. Brush up on key terms and the process with advice from H&R Block tax pros.
Congratulations on the Bonus! Learm more about the tax rate at H&R Block - whether you receive a holiday or cash bonus, it will apply to you.
If you are selling items at a farmer's market, learn how to file your taxes with H&R Block. From cash income to bartering, these tax tips will help.
