Q: I just received $84,000 inheritance from my mother's estate. About $4,000 came from her IRA. How much in taxes am I going to owe on this money? — C.H. Altamonte Springs
A: Proceeds from inheritance are generally not subject to tax; however, it's possible that your mother's estate was subject to some form of death tax depending on what state she lived in and/or owned property in. Each state has different laws regarding this, and it would have been the responsibility of her estate's personal representative. Typically, the heirs themselves do not pay tax on the amounts they receive. The $4,000 from her IRA will, however, be subject to income tax. This amount will be included in your total income and taxed accordingly. The amount of tax you'll owe will depend on how much taxable income you end up with for the year. — John E. Pinkley
Q: My husband will be 62 in May and has decided to file for Social Security. I will be 62 in August and want to know if I can file for my Social Security benefits also. Would you advise me to take spousal benefits or draw from my own account? — E. B., Clermont
A: Yes, when you turn 62 you can file for your Social Security benefits. If you are eligible for benefits based on your own work record, Social Security will always pay that benefit first. If your benefit as a spouse is higher than your own benefit, you will receive a combination of payments that equal the higher benefit. One thing to keep in mind, if you are receiving spousal benefits and start at age 62, the benefit will be only 35 percent of your husband's benefit amount. Your husband should start making his application three months before his birthday, so you will know the amount to use for your planning. — Robert J. Rall
Q: My sister's husband recently died and left her an $120,000 deferred annuity. She is 57 years old and wants to use some of the money to pay off her car. What should she do next? — D.J., Melbourne
A: Because she plans on taking out some of the money, she should take what she needs out as the wife beneficiary first. This is because spouse beneficiaries are not subject to the 10 percent tax for under age 59 1/2. She can roll over the rest into her name and defer until needed later — Al Baker
Have a question? E-mail us at firstname.lastname@example.org. Include your name (only your initials will be printed), hometown and phone. Questions are answered by Certified Financial Planners from the Central Florida Chapter of the Financial Planning Association. Answers are for educational purposes only. Please consult your financial professional. Questions and answers may be edited for space considerations.
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