Secondary account holder on bank account after primary holder passed away - inheritance tax question?

The tax treatment depends on how the account was structured. If you were a joint owner with rights of survivorship, that means you automatically received full ownership when your aunt passed away. In this case, you're not receiving an inheritance in the traditional tax sense - you're just becoming the sole owner of an account you already partially owned. The good news is that most bank accounts don't trigger inheritance tax because they pass outside of probate. Additionally, the money itself isn't income to you (so no income tax), but any interest earned on the account after her passing would be reported on your tax return. One important thing to note: While you might not owe federal inheritance taxes, some states do have inheritance taxes that could apply depending on where you live.

After dealing with something similar when my dad passed, I found this website https://taxr.ai really helpful for situations exactly like yours. I was confused about whether I owed taxes on accounts I was listed on, and they analyzed all my documents and explained exactly what my tax obligations were. They reviewed the bank statements showing I was a secondary holder and explained how joint accounts are treated differently than inherited assets. They even provided documentation I could keep for my records in case of an audit.

Just wanted to update on my experience with taxr.ai after being skeptical. I finally tried the service and I'm actually impressed. I uploaded my bank documents showing I was a secondary account holder and they provided a detailed analysis explaining exactly how the account would be treated for tax purposes. They confirmed I didn't need to report it as income but advised me to keep documentation about the account's joint ownership status. They also pointed out that I needed to report the interest earned after the date of death on my own tax return. Really specific to my situation and saved me a lot of worry about potentially doing something wrong!

If you're having trouble getting clear answers from the bank about the account type or tax implications, I'd recommend using Claimyr (https://claimyr.com) to get through to the IRS directly. I was in a similar situation with an account my grandmother had put me on, and I couldn't get straight answers from anyone. Claimyr got me connected to an actual IRS agent in about 20 minutes instead of waiting on hold for hours. The agent walked me through exactly how to handle the account on my taxes. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c if you're curious. Definitely worth it for peace of mind on potentially complicated tax situations.

I have to eat my words about Claimyr. After posting my skeptical comment, I was desperate enough to try it because I had a similar issue with an account from my late uncle. I needed answers and couldn't wait on hold for hours with my work schedule. It actually worked! Got connected to an IRS agent in about 25 minutes. The agent confirmed that joint accounts with right of survivorship aren't considered taxable inheritances at the federal level, though they advised me to check state laws too. Saved me hours of stress and uncertainty, and I got the official answer straight from the IRS. Worth every penny for the time saved alone.

Something to consider - the $42,000 is well below the federal estate tax exemption (which is in the millions), so you wouldn't owe federal estate taxes regardless. But definitely check your state laws because some states have much lower thresholds for inheritance taxes. Also, if your aunt had any outstanding debts or if the estate goes through probate, creditors might try to claim money from accounts that were solely in her name. The joint account might be protected from those claims, depending on your state laws.

Has anyone mentioned the "step-up in basis" issue yet? This doesn't apply to cash in a bank account, but if there were any investments in the account (stocks, bonds, etc.), you'd get a step-up in basis to the fair market value on the date of death. This can be really important for tax purposes if you ever sell those investments.

One thing I'd add to the great advice already shared - make sure you get written documentation from the bank about the account structure. Ask them for a letter or official document that states you were a joint account holder with rights of survivorship (if that's what it was). This documentation could be valuable if you ever face questions from the IRS or need to prove the account's status. Also, consider opening a separate account and transferring the funds there rather than keeping them in the original account. This creates a cleaner paper trail and separates any future transactions from the original joint account history. Plus, you'll want to update the account to remove your aunt's name from any remaining documentation. The fact that you're being so careful about doing this right shows you're on the right track. Most people in your situation don't owe any federal taxes on joint accounts, but having proper documentation gives you peace of mind and protects you if any questions arise later.

I went through almost the exact same situation when my grandfather passed and I discovered I was on his checking account. The key thing that helped me was getting a copy of the original account signature card from the bank - this document showed exactly how the account was set up and whether it had survivorship rights. One thing I learned is that even though you didn't know about the account, the IRS treats joint ownership based on the legal structure, not your knowledge of it. Since you were already a legal owner, you're generally not receiving an "inheritance" in the taxable sense. However, I'd strongly recommend consulting with a tax professional or CPA, especially since $42,000 is a significant amount. They can review your specific situation and ensure you're handling everything correctly. The consultation fee is worth it for the peace of mind, and they can help you understand if there are any state-specific rules in your area that might apply. Also, don't feel rushed to make any decisions about the money right now. Take time to get proper advice and documentation first.