Informational Articals - Inheritances - Inheritance Tax

As the saying goes there are only two guarantees in life – death and taxes. Ironically they go hand in hand when it comes to the issue of someone passing away and those who inherit property or money have to pay taxes on it. The inheritance tax applies to all residents in the United States who obtain such items through such circumstances.

This is one tax that really makes many people angry as an inheritance is a gift. It also complicates matters because some people can’t pay the inheritance tax unless they sell what they received. This can be difficult to do when you have that item to remember the deceased person by. To add insult to injury you generally have to pay inheritance taxes on both the state and Federal levels.

The percentage of inheritance tax you will have to pay depends on the amount of the value of the items you received. For an inheritance up to $40,000 you will have to pay 5.5%, up to $240,000 will cost you 6.5%, up to $440,000 will result in a tax of 7.5%, and anything more than that will have an inheritance tax of 9.5% attached to it.

They funds are due when you file the taxes for the year in which you received the inheritance. However many people who receive cash choose to pay it upfront from the funds they are to receive. This way they don’t have to worry about not having enough money to cover it when it is due.

In some instances the inheritance tax is due within nine months of the date the person passed away. You can also apply for a one year extension to pay the taxes. This is commonly approved in situations where assets are to be sold in order to cover the cost of the inheritance tax. There are specific forms you need to file in order to pay for the inheritance tax or to apply for an extension.

Your attorney, legal advisor, or tax preparer can assist you with taking care of the various forms for your inheritance tax obligation. It isn’t a good idea to try to avoid paying for inheritance taxes because you will be penalized by the government. They get information on all of the inheritances that take place so there will be a record and they will be expecting their funds.