I can honestly say I am relieved that tax year 2014 is over for me. I had an appointment with a new tax preparer last week. I had so many things that were thrown into the mix, financially, that there was no way I could hold myself together to do my own taxes this year. I'd like to think of myself as pretty savvy when it comes to finances and saving money, but having a professional's opinion really calmed my nerves. My father's preparedness also made the transition easier for me.
Items That Were Different In 2014
- Probate was not an issue, as I was the sole heir.
- My pops and I prepared a deed title transfer for their home into my name. Had it notarized. All I had to do was file it with the County upon his death. I paid off the house and paid the property taxes.
- All of the bank accounts had my name on them (not beneficiary, but I actually had access to all funds).
- We completed a Power of Attorney for Finances and Health. Had it notarized.
- I was beneficiary to two IRAs/Annuities. Since he was of age, it was mandatory to take the minimum distribution from all accounts. The beneficiary has a choice of withdrawing one lump sump or payments. I decided to take the absolute minimum. I also chose for them to take out taxes at the same time, rather than paying them at the end of the year. I let Federal take 20% and State take 15%. I knew I was overestimating these numbers. (The company also gives you a choice as to what percentage to take out for taxes.) With this particular company, I have to withdraw the whole amount by five years after his death. In speaking with my tax preparer, she showed me what numbers will work next year so I don't fall into the next tax bracket and pay even more taxes. So, I don't have to be so careful as I was last year.
- I was beneficiary to one 401(k). I took the absolute minimum distribution, again. I don't have to withdraw this one within five years.
- I decided to roll over the Annuities and 401(K) into a Roth IRA for myself. It will be a good supplement to my already established retirement account.
- Donations: I ended up having two or three yard sales and the leftovers I took to a non-profit thrift shop. I made sure I got receipts. Turns out, the maximum I can claim is $500 (unless I do an itemized list). I realized craigslist is the way to go to sell some of the stuff- more money in my pocket.
- Vehicle registrations: I kept my parent's vehicles and sold mine. Had three to write off.
- Turns out, I didn't have to file final taxes for my parent's this year, as their Social Security income was low.
I am, by no means, rich off of the inheritance. My father was smart with his money and I see this as a good security for my future, and also a decent emergency fund if I were to ever lose my job. I've made it passed the first year without any crazy emotional decisions, in terms of money and spending.
This closes a major chapter. I was so stressed for these things to be handled correctly. I am currently working on minimizing my monetary accounts and continuing to streamline my life. I feel freedom - a great reward after making good financial choices.