Are inheritances taxable federally?
- Thread starter JimMcC
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You need to check with a tax attorney. However, the "death tax" was repealed over time ending in 2005.
Basically, if you inherited over $1,000,000 in 2002, you had to pay federal taxes on it. That amount went up to $1.5 million if the death occurred in 2003-2004. If the death occurred in 2005-2006, you should owe nothing to the IRS for the inheritance.
Basically, if you inherited over $1,000,000 in 2002, you had to pay federal taxes on it. That amount went up to $1.5 million if the death occurred in 2003-2004. If the death occurred in 2005-2006, you should owe nothing to the IRS for the inheritance.
Also, be aware of state laws. There is still a Death Tax here in Virginia, but we're trying to get it repealed: http://www.deathtaxrepeal.com/
They are called estate taxes because they tax the value of the estate. The repeal of the federal estate tax is due to take effect in 2010. However that only covers 2010. IF no new legislation is passed the tax will reappear in 2011. Here is a link to the IRS page on 2006 rates.
http://www.irs.gov/formspubs/article/0,,id=112782,00.html#estate_tax_rate_2006
But it applies to only a small number of very large estates. I believe that it is currently at $2 million up from $1.5 million last year. Until recently the states took a % of the federal tax but now many states have enacted their own estate taxes.
The following states also have an "Inheritance" tax that applies to smaller inheritances not passed on to immediate family.
Indiana
Iowa
Kentucky
Maryland
Nebraska
New Jersey
Ohio
Oklahoma
Pennsylvania
Tennessee
As someone mentioned above Virginia may repeal its estate tax next week. That tax has a lower threshold than the federal estate tax but still does not apply to most citizens According to the state Department of Taxation, of the 1,866 estate tax returns filed in 2005, only 871 reported any tax liability. Some 298 of those returns were on estates valued at $1 million or less, with the tax owed on average about $12,400.
Be awrwe too that no state or federal estate taxes apply to property left to a surviving spouse.
http://www.irs.gov/formspubs/article/0,,id=112782,00.html#estate_tax_rate_2006
But it applies to only a small number of very large estates. I believe that it is currently at $2 million up from $1.5 million last year. Until recently the states took a % of the federal tax but now many states have enacted their own estate taxes.
The following states also have an "Inheritance" tax that applies to smaller inheritances not passed on to immediate family.
Indiana
Iowa
Kentucky
Maryland
Nebraska
New Jersey
Ohio
Oklahoma
Pennsylvania
Tennessee
As someone mentioned above Virginia may repeal its estate tax next week. That tax has a lower threshold than the federal estate tax but still does not apply to most citizens According to the state Department of Taxation, of the 1,866 estate tax returns filed in 2005, only 871 reported any tax liability. Some 298 of those returns were on estates valued at $1 million or less, with the tax owed on average about $12,400.
Be awrwe too that no state or federal estate taxes apply to property left to a surviving spouse.
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The estate tax is in lieu of income tax for the recipient. If the inheritance was below the threshold there is no FEDERAL taxation. The exception would be if the decedent would have paid tax on the asset when cashed---for instance if you inherit the assets from an IRA.
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Hmm, most if not all the states around WV has the inheritance tax. It is a wonder that WV does not have this type of tax the way they like to tax people to death here.
West Virginia does not have an inheritance tax. It had an estate tax but it was based on the federal estate tax credit---which is what was phased out in '04. For whatever reason they did not enact a separate estate tax as many other states did.
In the end states have to raise revenue. If there is no estate tax soem other tax exists or has a higher rate to take its place.
In the end states have to raise revenue. If there is no estate tax soem other tax exists or has a higher rate to take its place.
Depends on what the money was in. Cash no. Home, depends, you get whatever cap gains exemption they would have gotten. Some retirement stuff if they put it in pre tax then you owe the tax. Basically you will get a 1099C on any investment stuff that will list how much of it is taxable.
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