Las Vegas, NV asked in Tax Law for Nevada

Q: Why would one heir get a tax bill from IRS and other heir didn't

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James L. Arrasmith
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Answered
  • Tax Law Lawyer
  • Sacramento, CA

A: There could be several reasons why one heir receives a tax bill from the IRS while another does not. Some possible explanations include:

1. Differences in inheritance: If one heir inherited a larger share of the estate or assets that generate more taxable income (such as an IRA or 401(k) with required minimum distributions), they may owe more taxes than the other heir.

2. Varying tax situations: The heirs may have different personal tax situations. For example, one heir might be in a higher tax bracket, which could result in a larger tax bill on their inherited assets.

3. Estate tax: If the estate is large enough to be subject to federal or state estate taxes, the executor may have chosen to pay the tax from the estate funds before distributing the assets to the heirs. This could result in one heir appearing to receive a tax bill while the other does not.

4. Beneficiary designations: Some assets, like life insurance policies and retirement accounts, pass directly to the named beneficiaries and may be subject to different tax rules than assets that pass through the estate.

5. Timing of distributions: If the heirs received their inheritances at different times, the one who received the assets earlier may have had to pay taxes sooner.

6. Errors or omissions: There's a possibility that there was an error in the estate's tax filings or in the distribution of assets, leading to one heir receiving a tax bill unexpectedly.

It's best for the heirs to consult with the estate executor and a tax professional to understand their specific situation and determine the reason for the discrepancy in tax bills.

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