What is the federal inheritance tax? Is it true or more you are exempt in 2006 and 2007?

Question

The question should read "if you inherit 2 million or more in 06 and 07 you are exempt"?

Answer 1

The federal tax is an estate tax. It applies to the total sum of assests left by the deceased. If this amount is $2 Million or LESS, then the estate isn't taxed and the entire amount is left to the heirs. If the decedent left more than $2Million, then the estate will pay 35-55% of the excess in tax. Most states (but not all) base their tax on the amount of federal tax paid.

At the federal level, there is no inheritance tax, so the amounts received by the heirs is not taxed.

Answer 2

There is no Federal Inheritance tax in the US.

There is an Estate Tax but the estate is liable for it, NOT the beneficiaries of the estate. You have no Federal tax liability on an inheritance regardless of its size. There is one exception to that if you receive certain tax-preference accounts such as a traditional IRA. Since the money going in to the IRA was not taxed, it will be taxable to you when you withdraw the funds. (If the IRA was liquidated by the executor the estate would have paid the tax so you would not in that case -- but you would only be receiving the funds in that case, not the actual account itself.)

A few states still have an inheritance tax -- PA is one for example -- so you'll need to research that with your state's tax authorities. Even the states with an inheritance tax generally provide for the estate to pay it on behalf of the beneficiaries. The executor of the estate would be able to advise you if any state inheritance tax was paid on your behalf.

Answer 3

You may be thinking of 2010. The federal government passed a law a few years ago that repeals the estate tax starting in 2010. However, the law has a "sunset" provision, so the old law goes back into effect in 2011 unless Congress extends the current law or passes a new one.

Answer 4

There is no federal inheritance tax. There are state inheritance taxes in some, but not all, states. There is also a federal estate tax, which may be what you meant.

Answer 5

There is no federal inheritance tax.