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IRS Reporting of Inheritance
July 31

Posted on 07/31/2005 11:15:12 AM PDT by njords

If a person recieves an inheritance of $50K, does the bank report this deposit when I put the check in my savings account? Does anyone know?


TOPICS: Government
KEYWORDS: help; zotbait
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To: njords

Is this money you are going to be getting from Nigeria?


41 posted on 07/31/2005 11:41:30 AM PDT by ladyjane
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To: njords

http://search.irs.gov/web/query.html?col=irsweb&col=0&col=0&charset=utf-8&ht=0&qp=collection%3Airsweb%2C+-Wct%3A%22Internal+Revenue+Manual%22&qs=&qc=&pw=100%25&ws=0&la=en&qm=0&st=1&nh=10&lk=1&rf=0&oq=&rq=0&si=0&qt=inheritance&criterias=1a&Go.x=14&Go.y=8


42 posted on 07/31/2005 11:43:47 AM PDT by FairOpinion
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To: njords

Bury it.


43 posted on 07/31/2005 11:46:11 AM PDT by SaintDismas (Jest becuz you put yer boots in the oven, don't make it bread)
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To: Dog Gone
Are you sure about that? It's my understanding that the estate is responsible for all taxes before any assets are distributed.

The issue is federal (and in some cases, state) income tax. Since the person is dead, the money in tax deferred accounts can't be seen as income, but the government still wants its share. So it's treated as tax deferred, and the person inheriting it simply treats it as earned income.

However, if there is any inheritance tax, that is settled by the estate before the distributions. The estate is the entity that pays the inheritance tax.

The only reason that I'm aware of this is that when an uncle died, his estate went through this exact situation. Nearly his entire estate was made up of tax deferred savings, and those who inherited money had to pay taxes on it.

I'm not a tax attorney, although for some strange reason that I can't understand, my highest grade in a class in law school was in federal income tax. And I hated that class.

That's weird, isn't it? When I was in college, I was a computer science major, but one of the best grades I got one year was in the Marxist Economics class! And I really hated that class. LOL Go figure!

Mark

44 posted on 07/31/2005 11:52:43 AM PDT by MarkL (It was a shocking cock-up. The mice were furious!)
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To: big'ol_freeper; njords
"I think I smell a troll.

Interesting that you would join FR today to post this question. Here kitty kitty."



What in heaven's name would make you think a question like that, asked to a group of usually smart people, is coming from a troll?? Good Lord. I guess we aren't so smart after all. You sound more like a troll than he or she does.

After the welcome given, I might not be back to respond to the replies either.

Welcome to FR, njords!
45 posted on 07/31/2005 11:53:18 AM PDT by need_a_screen_name
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To: need_a_screen_name

Don't do that! I almost spewed coffee all over my computer screen from laughing so hard. Then I realized uwe wir not series. < /sarcasm>


46 posted on 07/31/2005 11:57:29 AM PDT by big'ol_freeper ("Freedom consists not in doing what we like, but in having the right to do what we ought." Pope JPII)
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To: njords
It depends on the amount of the estate. If the estate was worth more than 650k you will be taxed. However, usually the Fed takes their piece of the pie first and you should not have to pay. Talk to the Executor of the estate to see how much it was worth.
47 posted on 07/31/2005 12:01:02 PM PDT by IronMan04
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To: MarkL

IRAs and 401ks weren't even invented until after I graduated so I never was taught about their tax ramifications. But I certainly hope that they're not counted as part of the estate for inheritance tax purposes and then also taxed as ordinary income to the beneficiary.


48 posted on 07/31/2005 12:02:37 PM PDT by Dog Gone
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To: big'ol_freeper
"Don't do that! I almost spewed coffee all over my computer screen from laughing so hard. Then I realized uwe wir not series. < /sarcasm>"


I WAS serious. Some of the above posters had similar questions. I myself am about to sell a house that was inherited, and think it was a fair question. Granted, I Googled up my answers, as this poster could have, but I think the benefit of the doubt should be given until there is CLEAR troll-like behavior. Okay? :)
49 posted on 07/31/2005 12:02:57 PM PDT by need_a_screen_name
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To: need_a_screen_name

Snivle.

50 posted on 07/31/2005 12:05:18 PM PDT by big'ol_freeper ("Freedom consists not in doing what we like, but in having the right to do what we ought." Pope JPII)
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To: need_a_screen_name; big'ol_freeper

'bof' thought you were serious too. He was just doing a double reverse on ya, I think.


51 posted on 07/31/2005 12:06:26 PM PDT by leadpenny
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To: Psycho_Bunny

why consult one of them when you can sign up on an internet forum and ask the opinion of the general public?


52 posted on 07/31/2005 12:10:26 PM PDT by flashbunny (Always remember to bring a towel!)
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To: Bahbah
Inheritances aren't subject to the "death tax". The federal government imposes a tax on estates exceeding (this year) 1.5 Million. The amount of your individual inheritance is of no significance, only the amount of the decedent's estate.

By the way, if you're inclined to solicit and take free advice over the internet, instead of paying a legitimate, fee based financial planner, you may want to take a picture of your money. It's not going to be around very long.

53 posted on 07/31/2005 12:16:33 PM PDT by Mr. Lucky
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To: Dog Gone
But I certainly hope that they're not counted as part of the estate for inheritance tax purposes and then also taxed as ordinary income to the beneficiary.

They are. That's exactly what happened to my uncle's estate. When he died it was before the rise in the estate tax cut-off, so the estate was hit by that. Plus, it was plundered by the state of CA. Then, there was the distribution... Oh, and since the estate was in CA, CA figured that the distribution was taxable in CA as well, so the family members had to pay CA state income tax, as well as federal and state taxes where they were residents (although the CA state tax was deductable).

Mark

54 posted on 07/31/2005 12:35:36 PM PDT by MarkL (It was a shocking cock-up. The mice were furious!)
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To: elbucko; big'ol_freeper; njords
I get a kick out of you paranoid fools. Just think this person may get to enjoy FR and give half of it to cut a fundraiser. Paranoids sure love FR.
55 posted on 07/31/2005 1:01:17 PM PDT by B4Ranch ( Report every illegal alien that you meet. Call 866-347-2423, Employers use 888-464-4218)
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To: E.Allen

This figure is incorrect. It changes from day to day. It may be as low as two thousand dollars on some days.
A friend's mom works at a bank and is aware of this.
The ten grand is thrown out for us suckers to feel safe with. Withdrawals are also reported.


56 posted on 07/31/2005 1:13:27 PM PDT by em2vn
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To: E.Allen; njords
I believe banks are required to report all deposits over $10k.

Cash. Not a check.

The $10,000 cash rule is to help them spot money-laundering.

Under the Patriot Act, however, your records are an open book to the Feds.

They tried to get "Know Your Customer" banking legislation passed for years, and for years we successfully lobbied against it, but 9/11 gave them the hysteria trump card they had been waiting for.

57 posted on 07/31/2005 1:21:07 PM PDT by E. Pluribus Unum (Drug prohibition laws spawned the runaway federal health care monopoly and fund terrorism.)
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To: elbucko

There are lots of reasons why someone might not respond immediately. Some of them are inane comments.


58 posted on 07/31/2005 1:56:13 PM PDT by wildbill
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