An IRS Tool for Inheritance Tax Questions

Column distributed by Hearst Connecticut Media Group.

Links to resources referenced:

• IRS: Is the inheritance I received taxable?
  • https://www.irs.gov/help/ita/is-the-inheritance-i-received-taxable
    • Related column excerpt:
      • “The Interactive Tax Assistant (ITA) tool deals with income taxes. Found on the IRS webpage ‘Is the inheritance I received taxable?’ the tool helps a user ‘determine, for income tax purposes, if the cash, bank account, stock, bond or property you inherited is taxable.’ (Note that there is no mention of either estate or inheritance taxes.)”
• IRS: Instructions for Form 1041 and Schedules A, B, G, J, and K-1 (2024)
  • https://www.irs.gov/instructions/i1041#en_US_2024_publink1000286281  
    • Related column excerpt:
      • “Select ‘income distributed from a trust or estate (Schedule K-1)’ and you won’t get a helpful answer: ‘This tool cannot determine the taxability of the income you received from a trust or an estate for which you received a Schedule K-1 (Form 1041).’ ITA users are referred to the instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR, which are located on the IRS website.”
• IRS: Frequently asked questions on estate taxes
  • https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-estate-taxes
    • Related column excerpt:
      • “As to federal estate taxes, the IRS notes on its webpage ‘Frequently asked questions on estate taxes’ that they are due ‘if the gross estate of the decedent . . . is valued at more than the filing threshold for the year of the decedent’s death.’ For 2025, the threshold is $13,990,000 ($15 million for 2026).”
• ACTEC: State Death Tax Chart
  • https://www.actec.org/resources-for-wealth-planning-professionals/state-death-tax-chart/  
    • Related column excerpt:
      • “As for state estate taxes, 12 states and the District of Columbia impose taxes on estates exceeding certain dollar amounts, and five states have inheritance taxes, according to the American College of Trust and Estate Counsel. Maryland has both.”
• Charles Schwab Financial Planning: Dos and Don’ts When You Get an Inheritance
  • https://www.schwab.com/learn/story/dos-and-donts-when-you-get-inheritance   
    • Related column excerpt:
      • “As someone who inherits, you may need a lawyer or accountant to guide you on taxation of the inheritance you receive. In the article ‘Dos and Don’ts When You Get an Inheritance,’ Jeannie Bidner, a managing director at Charles Schwab, a multinational financial services company, writes: ‘Even if you consider yourself financially savvy, it can be useful to have a second set of eyes on your finances.’ Bidner adds that you should also talk with a tax adviser.”