Is money from selling my share of inherited home income or inheritance? How to report on taxes?

5 Thanks for explaining this. So even though I got a 1099-S, I might not owe any taxes if the value when I inherited it was higher than what I sold it for? Do I still need to include the 1099-S on my tax return somewhere? The IRS will have a copy of it right?

7 Yes, you still need to report the 1099-S on your tax return even if you don't owe taxes on it. The IRS receives a copy, so they'll expect to see it reported. You'll report it on Form 8949 (Sales and Other Dispositions of Capital Assets) and then transfer the information to Schedule D (Capital Gains and Losses). You'll list the $94,500 as the proceeds, your basis of approximately $105,000 (or whatever the actual value of your portion was at inheritance), and then calculate your gain or loss. In your case, it sounds like a small capital loss, which can offset other capital gains or up to $3,000 of ordinary income.

8 How does it actually work though? Do you just upload your tax documents and it tells you what to do? Did it help you figure out the actual value of the property at the time of inheritance? That's the part I'm struggling with.

14 I've seen ads for services like this but always wonder if they're actually legitimate. Seems like anyone can build a website these days. Did you end up filing yourself or did they try to sell you on having someone prepare your return?

12 It works by having you upload your documents and then it uses some kind of AI to analyze them and give you personalized explanations. You snap photos of your tax forms and any supporting documents (like the 1099-S and inheritance paperwork), and it identifies the important information. For figuring out the property value, I uploaded the appraisal document we got after my mom passed, and it extracted the relevant numbers and explained how to calculate my basis. It basically confirmed what my basis should be and showed me exactly where to report everything on my tax forms. No, they don't try to sell tax preparation services. It's just a document analysis tool to help you understand your situation. I still filed my own taxes using the guidance it provided, and it went smoothly. The IRS accepted my return without any issues.

3 Wait, so how does this actually work? I've been trying to reach the IRS for weeks about a different issue. Do they somehow have a special line to the IRS or something? Seems impossible to get through these days.

18 Yeah right. Nobody can get through to the IRS. I'm calling BS on this. I've tried calling dozens of times about my audit and always end up in the "call back later" loop. Hard to believe some service can magically solve this.

20 It's not a special line or anything magical. They use an automated system that basically does the waiting for you. You tell them what IRS number you're trying to reach, and their system repeatedly calls and navigates the phone tree until it gets a human. Then their system calls you and connects you to the agent. As for how long it takes - it varies depending on IRS call volume. For me it was about 15 minutes, but I've heard it can take longer during peak times. Still way better than doing it yourself and being stuck on hold for hours or getting disconnected. I understand the skepticism. I felt the same way before trying it. But it's basically just technology doing the boring hold-waiting part for you. The video demo shows exactly how it works if you're curious.

15 I've been wondering about this too. We didn't get a formal appraisal when my mom died, just used the county tax assessment value. Will the IRS accept that or do we need something more official?

2 County tax assessments can sometimes work, but they're often lower than actual market value and might not give you the full stepped-up basis you're entitled to. The IRS prefers more direct evidence of fair market value. If you didn't get a formal appraisal at the time, you might consider getting a "retroactive appraisal" where a professional estimates what the property was worth at the date of death. Other acceptable evidence might include comparable sales in the neighborhood around that time, or listings of similar properties. Remember that a higher established value at the date of death means a higher basis, which typically means less taxable gain (or more loss) when you sell. So it's usually worth the effort to properly document the highest reasonable value.

9 Yes, timing can matter! If you sell soon after inheriting, your basis is the stepped-up value at death and there's usually little to no gain. But if you wait years, any appreciation since death could be taxable. For example, if the property was worth $300K when your mom died (your basis), but is now worth $350K and your brother buys your half for $175K, you'd have a $25K gain ($175K minus $150K basis) that would be taxable. Keep in mind this would be a capital gain, and if you owned it over a year, it would be long-term with better tax rates.