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What is an Inheritance Tax?

An inheritance tax is also referred to as a death tax because it is a tax that is imposed on all estate money and property after an estate owner passes away and leaves their estate or a portion of their estate to another person.

Who has to Pay the Inheritance Tax?

States that currently collect a tax on inherited estate money or property are Connecticut, Maryland, Massachusetts, New Jersey, Nebraska, Pennsylvania, Oregon, New York, Indiana, Kansas, Louisiana, Kentucky, and Iowa. Since each state is likely to tax their residents differently, individuals need to research the inheritance tax laws in their state.

How is the Inheritance Tax Calculated?

Trying to figure out the amount of tax that will be owed depends on two different things:

* The total value of the estate.

* Any arrangements that were made before the time of death.

What Changes can I Expect for the Upcoming Year?

The exemption amount has been increased from $2,000,000 to $3,500,000. That is an additional $1,500,000 that you may inherit before having to pay taxes.

There are online services available to help you determine your liability for inheritance tax. There are many benefits to preparing your tax return online. For example, if you have experienced any life changes throughout the year (marriage, new baby, have bought or sold a house) an online service can help. I have found TurboTax Online to be a great service.

They will guarantee the accuracy of your return to the IRS and the state tax agency for your state return. They also ask a series of questions to guarantee the biggest refund possible, and if you have any questions they have tax professionals available 24/7 to answer them. Visit TurboTax Online today to prepare and file your federal and state tax returns.
Learn More about Inheritance Tax Law Changes.

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