Wow, have you ever been notified that a long-lost relative passed away and you are about to receive an inheritance? My name is Danielle Loughran, I'm a CPA with Accell, and I'm here to talk to you a little bit about how to report taxable inheritance income. The first thing I have to tell you is this is a very complicated topic, and this can be taxed on different levels depending on how the tax planning was handled. One of the first things you would do is receive a schedule K-1. What is this K-1? Well, it's something that the fiduciary of the estate would prepare and send to you, telling you how much of the inheritance money you are receiving, related to that tax return. The next thing I would suggest doing is picking up the phone and calling your local CPA because this is where it gets even more complicated. There are actually CPAs who specialize in just this topic. There are also tax estate attorneys who specialize in this topic. Either one can be a great benefit to you, ensuring that you're making the best use of your inheritance and reporting all of the information correctly that you received on that K-1. My name is Danielle Loughran, I'm a CPA with Accell, and I hope you've learned a little bit more about taxable inheritance income.
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K-1 tax inheritance Form: What You Should Know
What is an Estate K-1? K-1 is a Form 1099-G that must be submitted to the IRS when you die. However, if something is done to the K-1 that is allowed under the rules for the estate it will report on the estate tax return. If you give your K-1 to an attorney, this item is lost. What is a Trust / Will? A will or trust is just a legal document that will give a person control of property that may become subject to any rules that will be passed by the law. A trust or trust can be: A limited partnership (or corporation) A real estate trust (or estate trust) A non-residential trust A trust of a natural person (or any member of the family that is not the spouse of the natural person) A trust that is part of a decedent's estate A testamentary trust A trust to which you are a beneficiary (even if you have no will) What is a Trust and Estate Plan? You can make an account with a trust or an estate plan. This is done when there's money available to make investments. The money will be part of the trust you've made. It cannot be used to make any transactions without your permission. A non-registered plan is just a trust. In addition to trusts, estates, and trusts, you could also create a limited liability company or S-corp. What is An Estate Planning Strategy for a Non-resident? For those who live in states that have the Death Tax (Delaware, North Carolina) the estate tax is usually 4,000,000, but if you are from a state that doesn't have this tax, you can still pay the tax using your net worth of 5.35 million. In fact, there is no estate tax and that includes all taxpayers, even non-residents, if you are not living in a state that has the Death Tax. So, if you want to avoid the estate tax, this is a good place to get started What is a Trust and Estates Tax Deduction? Trusts and estates are tax-advantaged so those who have a will, a trust or an estate plan have an advantage. When you have any type of trust, the trust will transfer your assets out of it. The trust can be owned by any individual you choose. The trust can have members to transfer out any assets out, or they could be the only ones who do.
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