2010 Inheritance Income Taxes

trianglejohnFebruary 8, 2011

In a nutshell - Father died in 2007, mother died in 2008. All five adult kids named as heirs to an estate worth less than $200,000. Older brother is the executor of their estate and the only child to live in the home town and state. There was a problem with the will so lawyers were needed to correct things and move it through the process. Everything was settled and my brother sold their house in early 2010. We each received our share. I used my share to pay down my mortgage.

I'm trying to do my taxes and I'm confused about what documents I need. Because the value of the estate or my share of the estate is small, I understand that my inheritance will not affect my income taxes. Isn't there a document that I'm supposed to include with my taxes that shows how much I got? Something similar to a 1099 form? Who issues this form? Aren't they due to me on the last day of January? I do my taxes myself and don't want to pay someone to fill out simple forms (my income is simple, no need to itemize).

When I call my brothers and sisters to ask what they know or plan on doing, everyone just says that since the inheritance won't affect their income taxes they plan on doing nothing. They all have accountants do their taxes and they wait until the last minute to file. I have a fear that the IRS will ask about this later and it will cause me to file an amended return.

Anyone know what I am supposed to do?

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The estate pays any taxes due before distributions can be made to heirs. You don't need anything to file your taxes.

The only time this would not be true, is if any heirs were given more than the $1 million Gift Exclusion limit on tax-free gifts, in total over the lifetime of the donor. Since this didn't apply to your parents' estate, there's nothing to worry about.

    Bookmark   February 8, 2011 at 5:24PM
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    Bookmark   February 9, 2011 at 6:59PM
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