I'm just finishing up settling my mom's estate. We didn't have to pay any inheritance tax because her estate wasn't that big, and it's a direct line (aunt is sort of 'sideways', so you'll have to check on that). However, the executor's fee I took will be taxed as income on my 2008 taxes.

What you'll need to do is check to see if the fact that this is an aunt makes a difference--I have a feeling it does, because there were a lot of legal papers I had to sign verifying that the money was passing from mother to children.

Is the executor in America? Hopefully, they will be engaging the services of an accountant to help them with settling the estate. Perhaps you could ask them (executor) to check with the acct. on this issue for you?

Sorry about your loss, but how nice that she remembered you in her will.

Sorry I don't know the answer to your question...

But it looks like you are getting paid back for all you are always doing for others....

I'm so glad she remembered you in her will...

I hope you are able to do or get something for yourself to make you really happy.

patti

The inheritance taxes, as I understand them, are based on income received by the person inheriting the money. Since the income is in Canada, you may not have to pay taxes on it. I don't know the answer either, but I'd sure check carefully.

I don't think my Mom had to pay any taxes on what she inherited from her uncle. Not sure though. I think the estate has to be over $600,000. before taxed, not positive about this either. So I guess I'm not any help.
Ditto what Patti said. You deserve this. I hope you don't have to pay any tax on it.
Leslie

Thank you for the info Azzalea. I know how hard settling an Estate is and I would never want to be an Executor ever again. I am sorry for your loss also.

Yes the Executor is in the US. My Aunt was quite wealthy with business interests involved so I am sure the Estate will take some time to be Probated.

I am surprised my Aunt thought of me. I can understand her leaving something to my Sister but not to me. This was totally unexpected.

I was told when the Will was written after my Uncle died my cousin's were upset that my Aunt chose to give us monthly installments instead of a lump sum and that she was treating us like children. LOL My sister would rather have the lump sum but I appreciate the monthly installment more.

I think it was very thoughtful of my Aunt.

Anne

I think the amount is $100 a month so when money is tight for bills it will be nice knowing something extra will be coming in. I told my Sister it is better this way because it is easy to spend a lot of money on foolish things than if you have less money. I am sure this was my Aunt's thinking.

My Sister lives in a "Geared to Income" apartment so her rent will go up because of this.

I thought it was nice when my Aunt gave me all of her tea cups and saucers and when I received her Alice in Wonderland Royal Doulton last year. I never expected this as well.

Anne

If any inheritance taxes are owed, they will be paid by your aunt's estate before you ever see the money. Usually, the will also states that if taxes are due, they will be paid from the residue of the estate (i.e., the excess amount over and above any special bequests).

That said, the threshold where federal taxation begins is at least $600,000 (I don't know the exact amount, but I think it's higher than that by now), so if it's a small estate, no taxes will be due anyway.

Glad your aunt remembered you this way. It will be nice to think of her when you get the checks each month.

Anne, you are not a US citizen. You don't live in the US. You don't work in the US. I don't know what else matters to make any money you receive United States taxable income. You are only obligated to the tax laws of your own country. If there is no inheritance tax in Canada, you won't be paying any inheritance tas. That doesn't mean no taxes will be levied on the estate, but that's something else entirely.

Thanks for the info.

Mallory I was just wondering because I guess I was kind of thinking of taxes you have to pay on prize winnings if they are over a certain amount. We don't pay taxes on winnings in Canada but if I won a certain amount of money in the US tax would be takan off before I received it.

I know an inheritance isn't prize winnings but was thinking it might work the same way.

I was also thinking maybe the estate would cover the taxes as Joann stated.

I somehow didn't think I would have to pay taxes but thought I would ask.

Anne

Not inheritance tax, but you might want to check and see if you have to pay income tax on the money you receive. Don't know if Canadian tax laws are like US...just wanted you to be aware of it, so you don't get accused of tax evasion!!! LOL!!

Ole Joyful would know the exact answer - that's his interest - he knows finances!

I see your logic. The difference in the case of a game show is sales tax. Looking at a game show or any other giveaway as a retailer, they have to charge sales tax - whatever the tax is in that state. It's still a purchase of merchandise, despite they are giving the item(s) away, and sales tax still has to be charged at point of sale (at the time of the sale) on merchandise and services. The only thing not taxable is labor. (But also, there are instances of purchases made out of state and shipped to a state where the retailer has no store or affiliate.)

Anne, I don't know about the tax part of this, but I wanted to add to the others who more or less have said you reap what you sow. Reap on Anne!!!!!! You are such a thoughtful person. Being remembered in a nice way is what you deserve.

Linda

Greetings again Anne,

How great it is that your aunt remembered you in her will.

If there are taxes due relative to the estate, that'll be the business of the estate to take care of.

When you receive money from an inheritance here, it is not taxable: I received thousands from my Dad's estate in the late '80s and I didn't have to pay a cent of tax on that income.

When I invested some of it, it had become part of my assets and I had to declare the income that it produced, year by year, along with whatever other income I received.

If you invest it wisely and it earns you $300. next year, you'll have to declare the income that it produces, $300. in the year that it's produced.

Enjoy the addition to your income.

If the income isn't to go on for many years, I have a suggestion which may be of interest.

As it's more or less found money, unexpected, probably a good idea to spend one month's income from the estate in the first year and save and invest the second month's, when you haven't got really used to receiving it, yet. If you can afford it, continue that plan for another year or so. Then, for a time, spend two months' income and save and invest the third month's income. Then spend three months' worth, investing the fourth, for a year or so, as is convenient.

If you can save 6 months' worth for a couple of years, then 4 months' for a couple of years, then 3 months' worth for a couple of years, followed by 2 months' worth for a couple of years if you can, and one month's worth for a couple of years ... after 10 years, you'd have saved $3,200.00, and if you could invest it at 8%, paying 2% in tax and allowing 2% for loss of value due to inflation, you'd have about $4,000. (more or less equivalent to today's dollars) in that investment account.

If you chose to invest one or two of those monthly amounts per year as time went on, after while you'd have a substantial amount on hand.

After several years, when the monthly bequest ceases, you'll have an asset that will produce some income to at least partially replace the bequest that isn't available any more.

In the meantime, it's a nice addition to one's emergency fund, available when some unexpected expense comes along.

In which case, one needs to make an earnest effort to replace the funds that were used for the emergency, if one feels that one may likely need that fund intact to produce an addition to ongoing income, later.

Even if you expect the bequest to continue for many years, the plan that I've suggested may be a good idea, especially if you lack much of an emergency fund at present, for it's always useful to have some funds on hand to take care of an emergency without sweating blood when one comes up.

Good wishes to you for the weeks ahead.

ole joyful

Anne,

I'm sorry for the loss of your Aunt, but as the others have said, it's wonderful that you are a beneficiary. :-)

"you are not a US citizen. You don't live in the US. You don't work in the US. I don't know what else matters to make any money you receive United States taxable income. You are only obligated to the tax laws of your own country." Well, I can say that the State of California doesn't give a patooey about where you live or work. If money paid out to you is generated in California, the state will tax it. Don't know what the state's current laws are on inheritances, but I do know that Mallory's blanket statement is not true for California.

"The difference in the case of a game show is sales tax. Looking at a game show or any other giveaway as a retailer, they have to charge sales tax - whatever the tax is in that state. It's still a purchase of merchandise, despite they are giving the item(s) away, and sales tax still has to be charged at point of sale (at the time of the sale) on merchandise and services." Ah... they don't (at least in California) charge sales tax, as nothing has been sold. What does get charged is income tax -- the value of the goods and services won is considered to be the amount of income you earned from the show (or other giveaway). And, again, you don't need to live or work in California -- just have to have won the stuff in California to owe the tax to the state.

An inheritance tax is a tax imposed on the people (beneficiaries) who receive property from the deceased. The tax is calculated separately for each beneficiary, and each beneficiary is responsible for paying his or her own inheritance taxes. Those states that have inheritance taxes frequently tax spouses and children of the deceased at lower rates than other heirs.

An estate tax is a tax imposed on the decedent's estate as a whole. The executor fills out a single estate tax return and pays the tax out of the estate's funds. The heirs will only be held liable for the tax if the executor fails to pay it.

The current federal exclusion amount is $2000,000.