inheritance tax?

Question

how does inheritance tax work in USA. how much % is it???




keke

Answer 1

See my blog on this subject at http://wwwtaxman.blogspot.com.
Also see instructions for Forms 706, 709 and 1041 at
http://www.irs.gov/formspubs/index.html

There is a linked relationship beween the gift tax and the estate tax (it is not called 'inheritance' tax by the Fed Govt, but State taxes may be called 'inheritance tax'. The cumulative total combined total of gifts and estates of $ 1 million is exempt, and over that amount there is a tax.

GIFT TAX
One of the most frequently misunderstood things is the tax treatment of Gifts and Inheritances. Neither of these are income to the recipient and neither is taxable to the recipient.
If any tax is due at all, it would be a tax on the donor or the estate of the decedent.

If you acquire property by gift and later sell it, your cost for calculating gain or loss is the same as if it were in the hands of the donor.
INHERITANCE TAX
If you acquire property by inheritance, your ‘basis’ is generally the fair market value of the property on the date of death.

Taxable Gifts: If you give someone a gift of $12,000 or less you do not have to file a gift tax return (Form 709). If you give more then you should file Form 709, but there may be no tax due. Tax would be due if the cumulative gifts made over the years exceeds $ 1 million.

Estate Tax. No tax is due unless the estate exceeds $ 1 million

Fiduciary Tax return. An estate may not be settled immediately, so the Estate itself could have income: for example interest on bank accounts. This would be reported on Form 1041.

Income in Respect of a decedent.(IRD) This is income the decedent had a right to receive, while living, but was not paid until after death. This is reported on a Form 1040 for the decedent.

Answer 2

I assume you are talking about the estate tax. Inheritance taxes are assessed by some states but not all. Maryland charges an inheritance tax at 10% for assets passing to non-lineal descendants, I.E. aunts uncles, unrelated people.
The federal estate tax is assessed against estates greater than $2,000,000 (rising to $3,500,000 in 2009). If the taxable estate is $3,000,000 or more the top rate of 45% is charged. In addition a state that has an estate tax can charge as high as 16% for taxable estates greater than $10,000,000.
This tax only applies to about 1% of the population and even then it can be avoided with proper planning unless you are super wealthy, 10,000,000 or more of assets.

Answer 3

60%. isn't that some shizit?