If you inherit money from a deceased relative, do you have to claim that as taxable income? Good question! And I'm sorry for your loss. I hope your family is holding up as well as possible. But that's an excellent question. As a general rule, money that you inherit is not considered taxable income, so you don't have to worry about that. However, be careful with certain types of property that you may inherit. For example, if it's earning property, like a duplex, a rental property, or an annuity that has an earning stream, any earnings on that asset will be taxable to you starting from the date of death of your relative. The taxable implications may vary from state to state, depending on the probate process and other factors that I never really understood. There could be some earnings from the date of death until the day you actually receive the property. But generally, the property itself, the inheritance, is usually not considered taxable income. However, there could be a small amount of earnings depending on how long it takes for the property to be distributed to you. So, it's important to keep that in mind, especially when considering the type of property you may inherit.
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Video instructions and help with filling out and completing Can Form 3520 Beneficiaries
