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Inheritance produces tax panic
Dear Tax Talk:
My parents left me with some money in 1997 when
they passed away. I took the money and stuck it into mutual funds.
Then I found out my husband was cheating on me, and I was so hurt
I could not hold a job, so I took some money out of the mutual funds
and lived on it. Now I'm told I have to pay 28 percent of what I
took out.
Is this true? If so, I will owe until I die. I do
not have $15,000 to pay the Internal Revenue Service. I'm hoping
the woman at the IRS who told me this was new on the job and didn't
know what she was talking about. I am so scared. Heck, I might as
well just shoot myself, so I won't have to go to jail.
Jan
Dear Jan:
First of all, you don't go to jail for owing the Internal
Revenue Service, so you don't have to be scared of that.
If what your parents left you was a retirement account,
then you could owe around 28 percent in taxes. Chances are it will
be a lot less, since you get deductions, and the tax rates don't
start at 28 percent until your income gets higher.
If your parents left you regular savings accounts,
chances are you owe little or no taxes, and the woman at the IRS
doesn't know what she's talking about. Since you need help getting
this straight in your head, I suggest you go down to the local
IRS office with this response and the documents relating to
your account so someone can help you understand this situation.
I'm sure once you get this settled you'll sleep better
and be able to move forward.
-- Posted: June 20, 2003
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