Do You Have to Pay Taxes on Inherited Money?
The requirement to pay taxes on inherited money depends on the amount that's inherited and on the beneficiary's state of residence. The federal government doesn't charge beneficiaries an inheritance tax, although some states levy a tax, according to TurboTax.
While beneficiaries don't pay federal inheritance tax, estates that leave large sums may have to pay an estate tax before the money is distributed, Bankrate notes. The 2015 estate tax exclusion is $5.43 million, and the exclusion adjusts annually for inflation. In states that charge inheritance taxes, a beneficiary's family relationship to the giver can affect the amount owed, TurboTax explains. Most states don't levy an inheritance tax on spouses.