At what amount does inheritance tax kick in in the United States?

September 9, 2004 7:51 PM

I just inherited some money from my grandmother. I am, however, not sure of the US federal government's inheritance tax policies. I have tried the IRS website to no avail (big surprise there, eh?). Anyone know at what amount the tax kicks in and at what rate it's taxed?
posted by raintea to (6 comments total)

You probably owe no tax, unless your grandmother's estate is in excess of $1 million. Generally, estate taxes are paid by the estate-- not it's beneficiaries.

If you inherited an IRA, you should consult a tax accountant, attorney, or qualified financial professional to discuss your distribution options.

Link to the law.

The IRS page.
posted by Kwantsar at 8:11 PM on September 9, 2004

I am not an accountant or tax attorney but my understanding is that you personally would owe no tax on inherited income, unless it was income that your grandmother would have owed tax on but didn't due to her passing (i.e. a paycheck after death). In that rare case you would probably get a form or letter from the attorney handling her estate. The gift and estate taxes are paid by your grandmother and her estate, respectively, not by you. The money should be yours to keep.
posted by caddis at 8:25 PM on September 9, 2004

> Frequently Asked Tax Questions And Answers
Keyword: Inheritance

4.7 Interest/Dividends/Other Types of Income: Gifts & Inheritances

Are gifts, bequests, or inheritances taxable?

Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rentals, that income is taxable to you.
posted by dhartung at 9:23 PM on September 9, 2004

You should get a form from the estate...a K1, IIRC. That will let you know if there is any amount that's taxable. I have had to pay taxes on capital gains that occured while the estate was in probate. If it's at all a sizeable amount, I strongly suggest getting your taxes professionally done, because this stuff is confusing.
posted by gokart4xmas at 9:28 PM on September 9, 2004

And by professionally, please get a CPA or enrolled agent. Most attorneys don't know enough about tax law, and of course I won't say anything at all about H & R Block and their ilk.
posted by calwatch at 11:34 AM on September 10, 2004

Thank you all. I really appreciate it! My own advice? Never make a family member the executer of the estate...
posted by raintea at 10:35 PM on September 11, 2004