My relative inherited money in her 80s. Will it affect her Social Security taxes or Medicare premiums?

Inheriting money in one's 80s can be a significant event, especially for those living a modest lifestyle. For seniors, understanding the potential impact on their benefits is crucial. In the case of Social Security taxes, the inherited amount may push some of their Social Security benefits into taxable territory. Up to 85% of Social Security benefits can be subject to federal income tax, depending on their combined income, which includes the inherited amount.

The impact on Medicare premiums is also a consideration. Medicare premiums are income-based, and an increase in income due to the inheritance could lead to higher premiums. This is because Medicare uses a beneficiary's modified adjusted gross income (MAGI) from two years prior to determine their premium. If the inheritance significantly increases their MAGI, they may face higher premiums in the following years.

To watch next: it's essential for your relative to consult with a financial advisor or tax professional to understand the specific implications of their inheritance. They should review their current financial situation, tax obligations, and Medicare premiums to determine the best course of action. Additionally, they may want to consider strategies for managing their newfound wealth, such as tax-efficient investing or charitable giving, to minimize any adverse effects on their benefits.

Originally reported by marketwatch.com. FundNews adds analysis for finance & markets readers.