You Received an Inheritance: Is It Taxable?
Tax Tip:
Heirs don’t have to report inheritances to the IRS. However, an estate’s executor must file a final income tax return for the deceased person and, if the estate is large enough, must file an estate tax return and pay estate taxes.
If assets produce dividends, interest or other income after you inherit them, that income is usually subject to income tax and must be reported. If you sell an inherited asset, you’ll also generally owe tax on any gains – but only to the extent attributable to appreciation after you inherited the asset. Also, several states (currently Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania) impose an inheritance tax that is paid by the heirs, not the estate. Contact us if you’ve received an inheritance and have tax questions.
This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.
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