Gifts and Inheritances

In general, everything you receive as a gift or inheritance is not taxable. However, if you receive certain income from an inheritance such as distributions from an IRA, tax deferred annuities, accrued interest and dividends, or US savings bond interest then it is taxable to you. The key is if the deceased would have had to include it in their taxable income if they received it before death then you do too when you inherit it.