When money is changing hands, the tax man will usually want a piece of the action. Given this reality, people have questions about how taxation can impact inheritances. We will provide some answers to some of the typical questions that we hear in this blog post. Do you have to report an inheritance on your income tax returns? The answer to this question is generally no, and this is surprising to many people. An inheritance is not considered to be taxable income because the person that left you … [Read more...] about Answers To Estate Taxation Questions
Before we get to the increase in the estate tax exclusion, we should explain how taxes apply to inheritances in a broad sense. Many people assume that you are required to report an inheritance when you file your regular income taxes, but this is not the case. Inheritance is not taxable income for a logical reason. Assets that comprise estates are left over after the decedents paid taxes throughout their lifetimes. For example, if a person saved a certain amount of money every pay period for … [Read more...] about Estate Tax Exclusion Has Been Increased
Since the tax man seems to be involved in every financial transfer imaginable, you may assume that your family will be forced to pay some type of estate taxes. We are glad to be able to tell clients that in fact, most people do not have to worry about this form of taxation. However, those who do are facing a maximum rate of 40% that can have a very serious impact. In this post, we will provide five key pieces of information about death taxes that will give you a basic but broad understanding … [Read more...] about Five Things to Know About Estate Taxes
We often respond to clients who have questions about how taxation can enter the picture when assets are changing hands after someone dies. This is certainly understandable, and perhaps surprisingly, most of the news that we pass along is good news. Generally speaking, inheritances are not considered to be regular income for federal or state tax purposes. Plus, you get a step-up in basis if you inherit appreciated property. This means that for capital gains tax purposes, you are not … [Read more...] about Inheritance Tax Can Impact Kentucky Residents
When you are engaged in your estate planning efforts, it is natural to be concerned about estate taxation. Most people have heard the terms “estate tax” and “death tax” and in this blog post, we will provide some clarity about postmortem asset transfers and taxes. The Federal Estate Tax The federal estate tax is applicable in all 50 states, and sometimes people will refer to it as the death tax. This levy carries a 40 percent maximum rate so it can potentially consume a very significant chunk … [Read more...] about Will My Estate Be Subject to Taxation?
There are different types of taxes that can enter the picture when you are transferring assets. Many people have heard of the estate tax, and they assume that an inheritance tax and an estate tax are the same thing. In fact, these are two different types of transfer taxes. Estate Tax An estate tax is levied on the entirety of an estate before it is distributed among the heirs. There is a federal estate tax that is applicable in all 50 states. The maximum rate of the federal estate tax is 40 … [Read more...] about Will My Heirs Face Inheritance Taxes?