Q:
Is Inherited Money From a Trust Taxable?
A:
Quick Answer
Inherited money from a trust may or may not be subject to income tax, depending on the source of the funds. Property or money held by the decedent at the time of death is an inheritance and would not be subject to income tax, according to IRS Publication 559.
Continue Reading
Credit:
ericsphotography
E+
Getty Images
Full Answer
If the inheritance generates income in the form of capital gains, interest, dividends or rent, that income would be subject to income tax. While the assets remain in a trust, the tax burden lies with the trust. If there are distributions of money, any distributed income becomes taxable to the recipient. The recipient relies on information from the trustee to determine what needs to be reported as income and what is tax-exempt inheritance, according to IRS Publication 17.
Learn more about Financial PlanningRelated Questions
-
Q:
Is Money That Is Inherited Taxable?
A: In general, money that is inherited is not considered income and is not subject to state or federal income tax. However, there are instances when one might... Full Answer >Filed Under: -
Q:
What Are Inherited IRA RMD Rules?
A: The Internal Revenue Service, or IRS, requires that a person who inherits an individual retirement account, or IRA, takes out a minimum distribution amount... Full Answer >Filed Under: -
Q:
What Are Inherited IRA Rules for a Nonspouse?
A: Nonspouses are able to withdraw funds from an inherited IRA immediately or within five years of inheriting the account, reports Julie Garber for About.com.... Full Answer >Filed Under: -
Q:
How Do You Withdraw From IRA Accounts at 60 Years Old?
A: Retired account holders age 59 1/2 and over can make withdrawals from IRA accounts without penalty, although the funds are subject to income tax, reports A... Full Answer >Filed Under:
You May Also Like
-
Q:
When Was the IRA Life Expectancy Life Table First Used?
-
Q:
What Services Does Toyota Financial Provide?
-
Q:
What Are the Benefits of Waiting to Make a 401(k) Withdrawal?
-
Q:
Where Can I Get Price Quotes on HMO and PPO Insurance Plans?
-
Q:
Does Honeywell Offer Retirement Plans?
-
Q:
Is It Possible to Retire at Age 62?
