Re: $14,000 gift
posted at 2/20/2014 3:03 PM EST
In response to Maldenlady's comment:
My parents' estate is in the process of being distributed, and my brother has been advised that, per federal law, we can accept payments of up to $14,000/year as a tax-free gift. Is that true? If it's true, do I just not claim it at all on my next years' Federal 1040? Is there a different (Federal) form that I would need to file? What about Massachusetts taxes - if the $14,00 gift is a *federal* law, does that also hold for *Massachusetts* taxes? If so, do I just say nothing on my state taxes next year, or is there a special form I need to fill out for the state?
The estate is responsible for any taxes related to the assets on hand at the date of death. Any income generated from those assets is taxable to the estate, as well, unless it is distributed to the beneficiaries during the year earned. If the income is distributed, it is taxable to the heir receiving it, as income on their return. If this happens, you should receive a Schedule K-1 from the estate reporting that you received that income included in the distribution to you. To the extent that the distribution is funded from assets held by the decedent and taxed to the estate as property in the estate, no further taxes should be due from the recipient.
Hope this answers your question and helps in preparing your returns!
Mark H. Misselbeck, Tax Principal
Katz, Nannis + Solomon, P.C.