The short answer
Usually not on the inheritance itself. Property you inherit generally isn't income to you for federal tax.
The federal tax at death is the estate tax, figured on the estate as a whole. The IRS says most relatively simple estates don't need to file a return for it. Some states have their own inheritance tax, and some of those exempt children.
Tax can come later. Interest or rent the money earns is taxable to you. Part of what you take from an inherited IRA may be taxable too, and so is a gain if you sell something for more than your basis.
This chapter explains how things usually work in the United States. It is not legal, tax or financial advice, and the rules where you live may differ. Before you act on anything here, check it with one of the people named at the end of the chapter.
What to do
- Ask the executor, if there is one, whether the estate must file a federal estate tax return.
- Check whether the state your parent lived in has an inheritance tax or an estate tax.
- Ask whether a return or a waiver form is needed in that state, even if no tax is due.
- Get the date-of-death value of anything you inherit, and keep it with your tax papers.
- Include interest, dividends or rent from what you inherited on your own return.
- Ask a tax preparer before you sell anything you inherited.
- Take your time before deciding what to do with the money.
What can wait
- Every decision about the money itself: where to keep it, whether to spend it, and what it is for. An inherited IRA has its own deadlines, so check those first.
- Selling inherited investments or belongings, until you know their value on the date of death.
Who can help
A tax preparer, CPA or enrolled agent can tell you what you report and when. You can ask whether a single appointment is possible.
Your parent's state revenue or tax department can say whether its inheritance or estate tax applies, and which forms it wants.
The rules, phone numbers and web addresses in this book were checked against the agencies’, courts’ and organizations’ own pages in October 2026. Where a rule differs by state, the book names one state as an example. Check anything you rely on with the office itself.
From Book 3: Their Money
This page has the short answer and the closing lists from chapter 8. The full chapter explains, in plain words, what exists, what to ask, and who can answer. The book covers months 1 to 12 after the death.
Questions near this one
Other questions on related subjects, from this book and the others.
- How do I protect myself personally? Book 2, Being in Charge
- Can I be paid for this? Book 2, Being in Charge
- What happens to a 401(k) or IRA, and who pays tax on it? Book 3, Their Money
- Who files the final tax return, and when? Book 3, Their Money
Hear when Their Money is out
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