Q: Death benefit comes to you and I believe nonaxable. You now decide to transfer some to your child is that then taxable?
A:
When you receive a death benefit that is considered nontaxable, it indeed comes to you without the obligation to pay income tax on that amount. If you then decide to transfer a portion of this benefit to your child, the transfer itself can be considered a gift. In the United States, there are specific rules regarding gifts and how they are treated for tax purposes.
If the amount you transfer to your child is under the annual exclusion limit, there is no need to report it or pay taxes on it. If it exceeds this limit, you'll need to file the appropriate forms, but it's unlikely you'll owe any taxes unless you've exceeded the lifetime exemption. It's always a good idea to consult with a tax professional or financial advisor to understand the specifics of your situation and ensure you're complying with all relevant tax laws.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
