the amount is roughly $10000...i received as settlement of my mothers estate
No, you do not. Inheritance is not income.
This is not legal advice. This is to be used for educational purposes only.
Family Law Attorney
Not likely, UNLESS it is a"death benefit" as defined by the IRS. You should tell your tax preparer about the money.
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Estate Planning Attorney
Generally speaking an inheitance is not taxable as income. Income tax applies to active earnings from working and getting paid wages or passive income generally from investments like interest paid on a bank account or bonds, dividends paid on stock or capital gains paid on the profit you get when you sell an appreciated asset.
So to determine if an item recieved in an inheiritance might involve a tax debt you must first look at whether it would have involved taxes being owed by the previous owner. For example if the money was in a retiremement account like an ira or 401k, it would be a form of tax deffered wages that the decedant would have had to have reported and paid taxes on. You would then also need to report the money and pay the deferred taxes when you liquidate the retirement account but there may be special elections you can make as an heir that will allow you to spread out the withdrawals over several years and that will reduce the taxes you pay.
Sometimes inheirited property can create a tax debt when it is held for a while by the heir and later sold for more then it was worth when it was inheirited. This could happen with real estate, valuable art and antiques or investments. But this wouldn't normally be an issue with cash.
So in order to answer your question we would need to know whst kind of fund your money was in before you inheirited it. You can also ask a tax professional.
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