Latest Inheritance Tax Information, Amount, Changes, & Questions

Inheritance tax laws can change from year to year. If congress doesn't act, the current inheritance exclusion rate will drop dramatically. The federal inheritance tax rate is completely different from the state inheritance tax rate.

Most states rely on the taxes received from Inheritance and Estate taxes. They total up to 1.3% of the annual state tax revenue. The inheritance tax is imposed by the state and not every state has them. For example Texas does not impose state taxes on an inheritance.

Estate Tax vs. Inheritance Tax

The difference between the two is who is responsible for paying the taxes.

An estate tax will be the responsibility of the executor of the estate. The total tax due will be figured based on the value of the entire property. If there is not enough value in the estate to pay the taxes, then the heirs of the property are responsible to pay all taxes owed.

An inheritance tax is the complete responsibility to the beneficiary of the estate. The total amount due by the beneficiary will vary depending on some key factors:

Relationship to the deceased determines inheritance tax rate

Distant relatives and friends will be taxed much higher than children or spouses.

Fair market value of the property

The value if you were to sell the property at the current time. This is not the value of what it would cost to replace the items.

There can be many questions regarding inheritance taxes. It is important to make sure that you consult an estate planner to make sure that you ask all of the necessary questions when filing your return. You may not be aware of the latest changes to the tax laws. A great source for all of your up to date tax questions is TurboTax Online.

Let TurboTax be your online source for up to date tax questions.