question on tax, beneficiary

i will receive beneficiary of mutuals or the sold amount in check from my husband at death. thru a prenup. the prenup states we can file together or separate. apx. 400,000 which is safer and best choice to take when considering tax reporting. as of date i do not make enough of income to file taxes. will i have to claim as income? thank you, barbara



A final joint return will produce a lower tax in the year of death, but if you have been filing separately for specific reasons up to then, the year of death return should continue to use that filing status. As for the mutual funds, if you inherit them in a taxable account, they will receive a basis adjustment to their value on the date of death if you husband owned them.  You could then sell them with little taxes due. However, if the mutual funds are in an iRA or other retirement account or annuity, there is no basis adjustment and and distributions you took would probably be fully taxable.  But not if they are in a Roth IRA. As you can see, there are several variables involved in answering your question.



Add new comment

Log in or register to post comments