At what amount does inheritance tax kick in in the United States?

I am not an accountant or tax attorney but my understanding is that you personally would owe no tax on inherited income, unless it was income that your grandmother would have owed tax on but didn't due to her passing (i.e. a paycheck after death). In that rare case you would probably get a form or letter from the attorney handling her estate. The gift and estate taxes are paid by your grandmother and her estate, respectively, not by you. The money should be yours to keep.

http://www.irs.gov/faqs/faq-kw109.html Frequently Asked Tax Questions And Answers Keyword: Inheritance 4.7 Interest/Dividends/Other Types of Income: Gifts & Inheritances Are gifts, bequests, or inheritances taxable? Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rentals, that income is taxable to you.

You should get a form from the estate...a K1, IIRC. That will let you know if there is any amount that's taxable. I have had to pay taxes on capital gains that occured while the estate was in probate. If it's at all a sizeable amount, I strongly suggest getting your taxes professionally done, because this stuff is confusing.

And by professionally, please get a CPA or enrolled agent. Most attorneys don't know enough about tax law, and of course I won't say anything at all about H & R Block and their ilk.

Thank you all. I really appreciate it! My own advice? Never make a family member the executer of the estate...