Monday, April 18, 2022

When Inheriting Money, Be Aware of “Income in Respect of a Decedent” Issues

“Income in respect of a decedent” (IRD) may create a surprise tax bill for those who inherit certain types of property. Fortunately, there may be ways to minimize or even eliminate the IRD tax bite.

For the most part, property you inherit isn’t included in your income for tax purposes. Items that are IRD, however, do have to be included in your income, although you may also be entitled to a deduction on account of them. One common IRD item is the decedent’s last paycheck, received after death. Other common IRD items include pension benefits and amounts in a decedent’s IRAs at death. If you inherit IRD property, consult with us for assistance in managing the tax consequences.


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