| When an individual passes, on the federal government | | | | This money does not come directly from an estate |
| imposes an estate tax. This estate tax only applies to | | | | because it comes from the individual who received the |
| estate properties that are over one million fifty | | | | inheritance. |
| thousand dollars. The federal government is still likely to | | | | As previously mentioned, different states have |
| tax an estate even if all or a portion of the estate is | | | | different rules, guidelines, and restrictions surrounding an |
| being handed down to other family members. Instead | | | | inheritance tax; however, there are several common |
| of imposing an estate tax in this situation, there many | | | | circumstances that many states all consider. When an |
| states that impose an inheritance tax. | | | | individual who has passed on leaves money or |
| An inheritance tax is also commonly referred to as a | | | | property to a close family member, the inheritance tax |
| death tax because it is a tax that is imposed on all | | | | is likely to be lower than if the property was given to a |
| estate money and property after an estate owner | | | | friend or distant family member. Most states consider |
| passes away and leaves their estate or a portion of | | | | a close family member a mother, father, brother, sister, |
| their estate to another person. States that currently | | | | daughter, son, or spouse. |
| collect a tax on inherited estate money or property | | | | Individuals who are required to report an inheritance |
| are Connecticut, Maryland, Massachusetts, New | | | | and pay a tax on it are required to fill out the |
| Jersey, Nebraska, Pennsylvania, Oregon, New York, | | | | necessary state forms. These forms can be obtained |
| Indiana, Kansas, Louisiana, Kentucky, and Iowa. Since | | | | by contacting one of the state taxation offices. The |
| each state is likely to tax their residents differently, | | | | phone numbers for these state offices can generally |
| individuals need to research the inheritance tax laws in | | | | be found by doing an Internet search or by using the |
| their state or hire the services of a professional tax | | | | contact information from your last state tax return. It is |
| attorney. There are also many state governments | | | | also possible that the inheritance tax forms can be |
| who regularly update their inheritance tax guidelines, | | | | downloaded from the Internet. The majority of states |
| and many states are even considering completely | | | | that impose an inheritance tax have a tax website that |
| dropping the inheritance tax. This is why it is important | | | | may have a downloadable copy of the forms that can |
| for taxpayers or their tax attorneys to keep | | | | be printed, completed, and mailed in. |
| up-to-date on the latest inheritance tax information. | | | | As with estate taxes and traditional state income |
| When the federal government imposes an estate tax | | | | taxes, there are a number of inheritance tax |
| the amount of taxes owed generally comes from | | | | deductions that can lower the amount of tax money |
| some of the estate money left behind or the sale of | | | | that an individual may owe on their inheritance. To |
| estate property. The state taxing process of money | | | | determine these deductions individuals preparing their |
| or property that was inherited is a little bit different. | | | | own inheritance gift tax forms are encouraged to fully |
| States that have an inheritance tax require that the | | | | read the form instruction booklet to determine what |
| individual who receives the inheritance file and pay any | | | | these exemptions are and if they qualify for them. |
| taxes due on the money or property they inherited. | | | | |