Tax season 2023: Do you have to pay taxes on money or property received in a will?

Have you ever wondered if you need to pay taxes on money or property you inherit from a loved one? As Tax Season 2023 approaches, this question may be on your mind. In an interesting article, we found out that the answer is not as straightforward as you might think.

At first glance, it may seem that inheriting property or money would not be taxable, but this is not always the case. While the IRS doesn’t consider inheritance as income, certain types of inherited assets may be subject to taxes. For example, if you inherit real estate or stocks and sell them for a higher price than they were worth at the time of your loved one’s death, you may have to pay capital gains tax on the difference.

Additionally, if you inherit a traditional IRA or other retirement account, you will have to pay income tax on any distributions you receive. In the case of non-spousal beneficiaries, the entire balance of the account can become due within 10 years of the original account owner’s death.

It’s important to note that laws regarding inheritance taxes vary by state. Some states have inheritance taxes that apply to certain types of assets or for larger inheritances. However, there are also many states that do not have any inheritance tax at all.

In conclusion, while inheriting money or property may seem like a windfall, it’s essential to understand any tax implications that may come with it. Knowing what to expect can help you avoid any unpleasant surprises come tax time. So if you’re set to inherit something, it’s best to consult a financial advisor or tax professional to ensure that you are fully prepared for any taxes that may come your way.