Video: What Are Inheritance Taxes?
Hello, I'm Jeremy from TurboTax with important news on state inheritance taxes.
Did someone leave property or money to you in a will this year? If so, you may have to pay inheritance tax on it.
The federal government does not have an inheritance tax but if you live in one of the ten states that do, you may have to make an additional payment this year.
Be sure not to confuse this with the estate tax which is paid out of the property the deceased owns when they die. The inheritance tax, however, applies to the people who inherit that property.
Most of the states that charge this type of tax generally do not make you pay anything unless you receive money or property worth over 2 million.
- When it does apply, the tax rate is on average only 5% of your inheritance.
- But in some cases, you may be exempt from paying it at all depending on your relationship to the deceased.
Although the rules can change at any time, in 2011 only the following states have an inheritance tax on their books:
- New Jersey
If you live in one of these states, check with the state tax agency to see if you must file any specific forms and how much you need to pay.
For more tax tips and guidance, visit TurboTax.com.