i recieved approx 25,000 after my moms pasing. i deposited approx.14,000 in an i.r.a. unfortuinately ive been out of work,and had to take out most of it to pay utilities,legal fees food transportation e.t.c. will i be responsible for state,lcal and federal taxes? if so how much?? ThankYou!!!
Your facts are not clear, but here are some general rules in this area. Bequests are generally not taxable income to the recipient. One exception is called income in respect of a decedent (IRD), things like retirement benefits, annuities, salaries paid after death, etc. If your inheritance was not an IRA then you do not pay any income taxes. However, if the bequest was an IRA and you withdrew this amount, you must pay federal income tax on this amount. I am not an OH attorney so I can not tell you if such amounts are taxable under state and local law. As far as the 10% penalty for early withdraw of IRA monies, there is an exception for distributions upon death of the participant. So you would not be subject to the federal 10% penalty.
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Your probably will not have to pay any tax on your inheritance. You likely will have to pay a penalty when you withdraw funds from your IRA.
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I agree with attorney Fromm. You need to determine the source of this inheritance. If it is not an IRA it is most likely not taxable. However, beneficiaries can have secondary liability to pay estate taxes if the estate does not have sufficient funds to pay the estate tax. A good place to start is to talk with the attorney, accountant, and or executor of the estate.
Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.