Does an inheritance count as income?

We often get asked if inheritances are taxable. In most cases, the answer is no, inheritances are not taxable. Typically, the deceased person would have to have a net worth of 11 million dollars, or 22 million dollars as a couple before you have to pay inheritance tax. However, you could still be subject to estate income tax.

Inherited IRA

If you inherit an IRA, assuming it is not from a spouse, it will be taxable when you withdraw the funds. The funds have to be withdrawn from the account within 10 years of inheriting it. If it’s a Roth IRA, it’s not taxable, but you still have to withdraw the funds within 10 years.

Inheriting a Brokerage Account with Securities

Moreover, if you inherit a brokerage account with securities in it, you get what’s called a step up in basis. This is a nice advantage to passing on assets through a brokerage account.

Inheriting an Annuity

We are not a fan of annuities for may reasons, but if you inherit an annuity, the gain that you’ve received in that annuity is going to be taxed at regular income.

Inheriting a House

If you inherit a house, you get a step up in basis. For example, if I give money, do I pay a gift tax? The answer by default is yes, unless the gift is less than $15,000. If you gift over $15,000, then it will be taxed.

Download our free guide: “7 Steps to Leave a Financial Legacy”

Have more questions? Contact Us

Casey Smith
President, Wiser Wealth Management

Click here to schedule a consultation with one of our financial planners.

Listen to Our Podcast:


Recent posts

  • When Helping Hurts: How to Set Financial Boundaries

Share This Story, Choose Your Platform!

Wiser Wealth Management, Inc (“Wiser Wealth”) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). As a registered investment adviser, Wiser Wealth and its employees are subject to various rules, filings, and requirements. You can visit the SEC’s website here to obtain further information on our firm or investment adviser’s registration.

Wiser Wealth’s website provides general information regarding our business along with access to additional investment related information, various financial calculators, and external / third party links. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. Wiser Wealth does not endorse or accept responsibility for the content of any third-party website and is not affiliated with any third-party website or social media page. Wiser Wealth does not expressly or implicitly adopt or endorse any of the expressions, opinions or content posted by third party websites or on social media pages. While Wiser Wealth uses reasonable efforts to obtain information from sources it believes to be reliable, we make no representation that the information or opinions contained in our publications are accurate, reliable, or complete.

To the extent that you utilize any financial calculators or links in our website, you acknowledge and understand that the information provided to you should not be construed as personal investment advice from Wiser Wealth or any of its investment professionals. Advice provided by Wiser Wealth is given only within the context of our contractual agreement with the client. Wiser Wealth does not offer legal, accounting or tax advice. Consult your own attorney, accountant, and other professionals for these services.

Sign up for our newsletter!

Our latest blogs, podcasts, and educational videos delivered to your inbox weekly.