Asked 6/19/2011
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Inheritance tax My Husbands Grandmother passed away, she lived in Ohio. She has left us $10,000.00. We live in NC. Do we have to pay Federal and NC State taxes on that money. And if so how much |
Answer 1/2 - Submitted 6/19/2011
Theresa, I'm sorry for your family's loss.
I can address your question generally. Please note that I cannot and am not purporting to provide legal or tax advice. The devil is in the details with any tax question. There are so many variables. So please consider this a starting point for your own research or conversation with your personal tax advisor.
Generally, you do not pay federal income taxes on money you inherit.
Again, please consult a tax accountant or other tax advisor for an answer based on your particular circumstances and state law. You may want to consult the IRS' web site, www.irs.gov. and the North Carolina Department of Revenue web site. And try any of the free online tax preparation sites to look at what effect if any the inheritance has on your tax liability.
Answer 2/2 - Submitted 6/19/2011
Depends on the source of the funds. If it's granny's IRA or annuity, it will be taxable to both federal and NC governments. If it was a bank account or life insurance, then no, it wouldn't be taxable. There are sometimes situations where an amount may be partially taxable.
You will want to ask the Executor if you will be receiving a K-1. That, or a 1099-R (for retirement and annuity income), would let you know if any of the inheritance is taxable.
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