posted at 4/10/2012 9:31 AM EDTHi, I recieved money from a deceased relatives estate. Do I need to claim it on taxes?
posted at 4/11/2012 7:23 AM EDTIn Response to Estate:Hi, I recieved money from a deceased relatives estate. Do I need to claim it on taxes?
Posted by kc624
An inheritance is normally not taxable. That said, however, any income earned by the estate assets after the death of the owner (or income deferred by the decedent - such as a note from an installment sale or retiremnent accounts) is taxable to the heirs, if it is distributed to them by the estate. Distributions to heirs from an estate are treated as first from the layer of assets comprising income and then form the principal that is not taxable. Who ever is the executor or other representative dealing with settling the estate is responsible for filing income tax returns, paying any income taxes due on the estate's income or notifying the heirs of the amount and nature of inocme items distributed to them under the income distribution rule described above. That notic comes in the form of a report to each hier of their share of these income items and that report is called a Schedule K-1 from a filer of a Form 1041 (the return the estate is required to file with the federal government).
Hope thsi helps in preparing yhour returns!
Mark H. Misselbeck, C.P.A., M.S.T., Tax Principal
Katz, Nannis + Solomon, P.C.