Inheritance or income? Declare on return?

Forum|Forum|2 years ago
January 21, 2024
2 replies
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In 2023, I received a lump sum payment in the low 5 figures, sent by the UK government. I got this payout because my late spouse never claimed their state pension (similar to social security) while they were alive, and it accrued for several years during their final stages of life.

I have documentation from the UK authorities stating clearly that this is an inherited sum, and the reasons for the inheritance. No UK tax was deducted since I am a US citizen/resident, and there is a double taxation treaty.

Question is: Should I consider this as income on my 2023 US tax return? Or should I consider it like any usual inheritance of this magnitude, which would not be taxable in the US?

Thank you

Best answer by dmertz

This sounds like income in respect of a decedent which would be taxable to you as beneficiary. If it would have been taxable had it been paid to your spouse, it's likely taxable to you as beneficiary.

MinhT1

Inheritances are not considered income for federal tax purposes, whether you inherit cash, investments or property. However, any subsequent earnings on the inherited assets are taxable, unless it comes from a tax-free source.

You do not report inheritances on your tax return.

Please read this TurboTax Help article for more information.

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