Q:

Is an inheritance considered income by the IRS?

A:

Quick Answer

As of 2012, an inheritance is not considered income unless the amount received is greater than $5 million. The IRS states that inheritances do not have to be claimed as income, and there is no estate tax for the recipient. The estate of the deceased may be subject to both the estate tax and federal income taxes, depending on the value of the estate and the income claimed.

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Full Answer

The recipient of an estate inheritance of less than $5,120,000 is not liable for income, estate or gift taxes. Conversely, as of 2012, the living giver of a monetary gift of over $13,000 is responsible for paying gift taxes.

Legislature amends the value of gift and estate tax exclusions each year; it is advisable to contact the IRS directly when in receipt of large amounts of money.

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