Hello and thank you for your question.
Good news! The recipient of an inheritance never has to pay U.S. tax
on what he or she receives. The estate tax on a U.S. estate is paid
by the executor out of estate funds (typically as a charge against the
residue of the estate), and not by the recipient. An executor who
fails to pay the estate's estate tax is personally liable for the
shortfall. And because inheritances, like gifts, are income tax-free
to the recipient, whatever you receive from the estate is U.S.
tax-free to you regardless of your citizenship or where you reside.
Internal Revenue Code Section 102(a)
"Gross income does not include the value of property acquired by gift,
bequest, devise or inheritance."
http://www.timbertax.org/research/irc/strSearch2.asp?file=SubChB&sec=Sec.%20266&id=research&topic=taxcode
http://answers.google.com/answers/threadview?id=6688#comments
Search terms used:
"property acquired by gift, bequest, devise or inheritance"
Thanks for bringing us your question. If you require clarification,
please request clarification before rating my answer.
Google Answers Researcher
Richard-ga |
Request for Answer Clarification by
bigben1-ga
on
18 Oct 2004 13:36 PDT
I didn't understand the part about the executor. If someone in charge
of disbursing the inheritance (executor?)after the passing of the
person leaving the inheritance has $10,000 that were left to me as my
inheritance, and that is the whole estate, 1)does he have to pay tax
before he gives this money to me, making it less than 10,000? Or 2)
because there's no residue there's no tax? or 3)(something else)?
Thanks
P.S. The amount mentioned is just an example (in case different laws
apply to different amounts)
|
Clarification of Answer by
richard-ga
on
18 Oct 2004 14:59 PDT
That's right, if the whole estate were $10,000 and if there was a
$1,000 estate tax, and if you were the sole beneficiary, the executor
would pay $1,000 to the IRS and $9,000 to you.
But really, there's no federal estate tax on most estates under
$1,500,000 and no state estate tax on most estates under $675,000, so
in the above example the executor could pay the whole $10,000 to you.
And either way, what you get is tax-free.
If you would like to give me an approximate value for the potential
estate assets (and also the U.S. state where the person lives) I can
confirm whether the estate is likely to have any tax to pay.
-R
|
Request for Answer Clarification by
bigben1-ga
on
19 Oct 2004 11:24 PDT
Thanks. CA. +/- 400K
|
Request for Answer Clarification by
bigben1-ga
on
19 Oct 2004 11:52 PDT
actually, the whole estate is 2.4 million, all to be distributed, but
my share will be 400k
|
Clarification of Answer by
richard-ga
on
19 Oct 2004 12:46 PDT
So in round numbers the estate might pay $400,000 in federal and state
estate taxes, leaving $2,000,000 to be distributed.
If your share is one-sixth, then your inheritance would be closer to
$333,000, which you receive free of further tax.
|
Request for Answer Clarification by
bigben1-ga
on
19 Oct 2004 13:27 PDT
I am giving you a rating of 5 because even if it took a few iterations
to get to the answer, and I might have deducted a star for that, you
did get me the right answer and your questions/initiative to try to
make sure I did were good. Thank you very much.
|
Clarification of Answer by
richard-ga
on
19 Oct 2004 16:39 PDT
I'm glad you're satisfied with the answer.
-R
|
