I Inherited Money, Do I Need to Pay Taxes?

As a probate attorney, this is the most common question I get asked by clients, family, friends and acquaintances. Generally, the answer is no.  However, it really depends on the type of tax referred to and the asset inherited.

An estate may be required to pay federal estate tax, but that would only apply to estates over $11.2 million for the year 2018. Some states also have estate and/or inheritance tax, but Arizona is not one of them.

Remember, estate tax is a tax paid by the estate of the deceased person and inheritance tax is paid the person or persons who inherited the assets of the deceased person. If tax is owed by the person who inherited, it is most likely income tax.

A beneficiary may have to claim and pay income tax on the income they received from the estate. For example, if a person received $500,000.00 from an estate, of which $499,000.00 is principal and $1,000.00 is income, then the beneficiary would have to claim and pay income tax on $1,000.00 of income.

Laura M. Trujillo
ltrujillo@mclawfirm.com
480-994-2000

Disclaimer: This blog is for information purposes only. Legal advice is provided only through a formal, written attorney/client agreement.

 

ANNOUNCEMENT

 

Effective January 6, 2020, attorneys Michael W. Margrave, Michael L. Kitchen, and Patrick J. Van Zanen, as well as paralegals Brittany Crane and Mallory Rasmussen, will join Sacks Tierney P A at their office located at 4250 N. Drinkwater Boulevard, Scottsdale, AZ  85251. Their new contact information is:

Michael W. Margrave    
direct line: 480-425-2606
fax: 480-425-4906
michael.margrave@sackstierney.com

Michael L. Kitchen
direct line: 480-425-2619
fax: 480-425-4919
michael.kitchen@sackstierney.com

Patrick J. Van Zanen    
direct line: 480-425-2623
fax: 480-425-4923
patrick.vanzanen@sackstierney.com

Brittany Crane
direct line: 480-425-2627
fax: 480-425-4927
brittany.crane@sackstierney.com

Mallory Rasmussen
direct line: 480-425-2629
fax: 480-425-4929
mallory.rasmussen@sackstierney.com

We hope to continue serving your needs at our new home with Sacks Tierney P.A. beginning January 6, 2020