Education
Taxpayers often make the mistake of ignoring inheritance assets on their tax return. I’ll explain how to avoid and fix this mistake today. Click here for a FREE tax relief consultationCheck out our FREE tax resource library A frequent error taxpayers make is ignoring inheritance assets. When a person inherits stocks or other assets, they often believe that they are not taxed. This is partially correct; the assets are not taxed when received. But when the assets are sold later on, you must report the sale on your tax return. I’ve had many cases where ignoring these sales caused tax notices with huge taxes, penalties, and interest that surprised and scared the taxpayer. Since inherited assets receive a step up in basis (or tax cost), there is often very little gain or loss. There would be little, if any, effect if a sale occurs quickly after inheriting these assets and the sale is reported correctly. When the assets are sold later on, you must report the sale on your tax return.To correct this problem and eliminate surprise taxes, we must amend the original tax return that ignored the sale and provide evidence of the death of the person receiving the stocks, stock ownership statements showing the history of previous ownership, and receipt and eventual sale. I have had several cases where, in the end, there is very little tax effect. The time and fees paid to a professional to amend a tax return are expensive. A taxpayer can save themselves a lot of grief and money by understanding that any asset they inherit and later sell must be reported on their tax return. If you have tax problems, you should protect yourself by hiring a qualified tax problem specialist. We have experience in and strategies for negotiating with the IRS to get you the lowest amount that you have to pay. If you have any questions, just give me a call or send me an email. I would be happy to help you!