Estate tax question

[Anonymous No.57142426]

Please help me not pay the government money /biz/. According to this site:
https://www.nerdwallet.com/article/taxes/estate-tax
>The IRS exempts estates of less than $13.61 million from the tax in 2024 ($12.92 million in 2023), so few people actually end up paying it. If you inherit stocks, cash, or small amounts of other assets, unless they add up to $13.61 million in 2024, you probably won't have to pay the estate tax.
According to this calculator:
>Net taxable estate is $123,000.
>Because the taxable estate value is within the exemption, the federal estate tax due is $0 for 2023.

I inherited an IRA worth 123,000. In order to cash out, Fidelity demanded 20% federal withholding or else they said they couldn't cut the check. So I'm left with 98,300 approx. I'm confused as to what taxes I actually owe and why they demanded withholding. Can a /biz/ bro help me out?

[Anonymous No.57142430]

Oh I forgot to mention I had to set up a legitimate legal estate for this. So it is an estate, and not an inheritance.

[Anonymous No.57142499]

Go ask a tax man. Why do you think a mongolian basket weaving board is the right place for this?

[Anonymous No.57142519]

>>57142426
IRA distributions of pre-tax funds are subject to withholding
this has nothing to do with being an estate. pre-tax IRAs have the money withheld - then, if they withhold too much, you'd get the money back at tax time.
this is an actual answer, I just helped my dad with this process.

[Anonymous No.57142533]

[Anonymous No.57142559]

That 20% is normal can't do nothing about that. Your next legal dilemma is since it's an estate account, and unless it stipulated you're the beneficiary of the IRA, you are required to distribute it to other direct siblings. Otherwise it's meant to payoff debts, reimburse if you paid out of pocket of said person.

[Anonymous No.57142580]

>>57142559
Also if you did setup an estate account you were likely given an IRS number for the filing to do next year, so basically you'll file another set of tax form on that estate account as-if it's a person.

[Anonymous No.57142590]

>>57142426
They’re withholding the capital gains on the IRA. Has nothing to do with an estate tax. Of that you’re free and clear. But the IRA was presumably funded with PRE-tax dollars.

[Anonymous No.57142621]

>>57142426
>>57142519
there are also special rules around the distributions from an inherited IRA. I believe you have 10 years to clean it out.
if you make a withdrawal, you get a 1099R from fidelity at the end of the year showing the amount of the distributions and the 20% tax withheld, which gets applied to your tax liability. you'd then get a refund or pay in depending on your job.
tax rates have a high chance to go up soon, so if you're in the 22% bracket or below, it's most likely optimal to withdraw half this year and half next year.
if none of that makes sense, a quick meeting with a CPA should answer everything, although they would likely say similar things.

[Anonymous No.57142672]

>>57142519
>>57142590
this is the preliminary consensus I reached from some cursory research just now
>>57142559
>>57142580
Yes, I have to give 50% of it to my bitch sister who stole some of the inheritance and refused to pay me back for the funeral all totaling 19k, which wound up costing me aprox 34k total with the missed gains from crypto. I did get the tin.
>>57142621
I had no additional income this year, but I did tell fidelity to blow me and closed the entire account, so it looks like I will owe additional money to the IRS on top of the 20% withholding, as it's being treated as taxable income, correct?
Unfortunately, my father did not name beneficiaries on this specific account, which I think kind of fucked me. I wouldn't have needed to set up an estate otherwise.

[Anonymous No.57142801]

>>57142672
If you paid for the funeral, you can cut yourself a check (show receipt you paid and how) that's what estate accounts are for. And whatever's left is split, you'll get a bigger portion of the pot anon. Always save your receipts. You are meant to reimburse anything you paid out of pocket of the person, this is the family hardship (may vary state to state) legals fees if you paid for any legal fees as well.

[Anonymous No.57142828]

>>57142672
If your sister stole money that's something you have to go to court separate from the ira thingy, if you documents to prove it typically, can challenge a she say/he say.

In the end just remember the bank is watching how you disperse the funds so always keep the memo noted, and have some paperwork of what's being paid. Then just zero the account paying off any creditors if there are any before disbursing the remainder to your sister/and yourself. She is required to have a copy of the accounting to, so just list off your reimbursement of funeral and I guess that's the split afterwards.

[Anonymous No.57142870]

>>57142828
*Meant you can't challenge stolen funds without documentation.

So if there's a record that shows cash of deceased and she took it, your entitled to that half. You could file a police report to document it if you do have paperwork again that shows it was there and now it's not there lol. That's a first step, if it's alot of money yeah I'd talk to a lawyer. Or claims court over 5k/small claims under 5k dunno how it is for your state.

[Anonymous No.57142998]

>>57142870
she drained his checking account, she is the older sibling so she was listed as the only beneficiary on it, knowing my dad how it went was he scribbled something down just in case and it was her cuz she was oldest, but he trusted me with his finances and we were actual friends. he didn't even really like my sister is the fucked up part, a couple months before he died he gave me the account info for his other retirement account and asked me to re-invest it for him, but I told him it was a bad time and to wait a while and then he died, so I split that account with my sis. but point being legally she is entitled to the money from the checking account, which I think was around 11k. the other thing she did was cash the check for the motorcycle he crashed on which was totaled, which I think was like 8500. then she just refused to pay me back for the funeral, storage unit, etc.... I footed basically everything under the sun after he died trying to do her family a favor, even though I live alone in a fucking basement. I guess I figured she wouldn't do this because she was family, but the truth is she's always been a narcissistic bitch who's treated everyone around her like total trash.

I'm not even taking this stuff to court, anon. the fact is that she broke my heart and she's going to have to pay me back for everything, including the gains lost from having to cash out my investments.

[Anonymous No.57144222]

>>57142998
You can take this to claims court. Show you and her are on the account. You are entitled to half of that amount legally. As well as the check she cashed.

Anything that had his name you are entitled to half that she took all from. This is fairly common. The judge will rule in your favor. Easy call for the court as this is all too common. Once an estate is established everything is supposed to be fairly split. And quick grabs thinking they can get away is only short term. I believe it's only a few hundred bucks to file it to claims court, no lawyer needed. Just evidence of the items you described and simply say Your sister took it all, and refused to split it.

[Anonymous No.57144564]

>>57144222
actually I took it all personally. if you know what i mean then you know what i mean. i don't need court.

[Anonymous No.57144915]

>>57142430
What difference does a legal estate vs an inertance make?