Inheritance $$$$$ tax's????

[stvdman]

I can not believe I am asking this on a internet car forum, BUT here it goes.

How is money that is left to you after the death of a family mamber (Inheritance) taxed. I assumed it would be easy but I cant seem to find a straight answer.

I have just started my search, so please excuse my ignorance.

Thanks

 

[dtheo]

its the government, they tax everything, sometimes twice!! welcome to the real world bro.

 

[WireEater]

I don't think he is asking why it's taxed but how it's taxed. Like how much do they tax?

 

[BLK03SVT10TH]

How about this.

http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States#Inheritance_tax_at_the_state_level

 

[08snake]

I too just came into some inheritance. Total value of the estate is around 130K. I'm looking at about 25K in taxes at the Fed level. Haven't looked into the state level yet since it will be another month or two before I get it. I figure if it's enough to get out of debt and some extra padding for my investments, I'll be happy.....

 

[Outlaw99]

there are so many factors, if it was pretaxed money, or IRA's - when my wife's mother died, total cash assets were 425,000, we brought home 333,000 - it was very complicated...but we didnt really care, it took months but we just wanted it overwith

 

[vertcobra99]

I thought anything under 650,000 was not taxable by the "death tax" or inheritance tax... ?

 

[vertcobra99]

I thought anything under 650,000 was not taxable by the "death tax" or inheritance tax... ?

Edit: After reading that wiikipedia entry... it looks like you shoudln't be paying any taxes on anything under $675,000. Looks like you guys who paid taxes on less then that were getting hosed.

 

[Juruense]

Get some professional advice.

 

[Outlaw99]

no because the money came from a pretaxed 401K term over 20 years. they will never let you put tax free money in a 401K and not charge you when it comes out.

 

[vertcobra99]

no because the money came from a pretaxed 401K term over 20 years. they will never let you put tax free money in a 401K and not charge you when it comes out.

I was unaware that it was a 401k... those will always be taxed... but lets say she had a savings account with 100k in it... the government shouldn't be able to take any of that money.

 

[2003 Silver]

The purpose is to more equally distribute the nations wealth instead a small percentage having it....talk about un-American. Inheritance tax is complete BS.

 

[Outlaw99]

I was unaware that it was a 401k... those will always be taxed... but lets say she had a savings account with 100k in it... the government shouldn't be able to take any of that money.

that is correct, she had a saving of 25,000, that wasnt taxed in california, but because we lived in NC, they found a reason to tax it 25%

 

[lowdrag]

Actually if you look at the tables in the link again the maximum for '07 and '08 is 2 million before you get taxed. I also believe that it is per person. So if you have a trustworthy significant other, they could also be named as a beneficiary for another 2 million before you would be taxed. No matter how you look at it, if it's a significant amount of money, hire an attorney who knows the rules.

 

[FordSVTFan]

It all depends on how the money was left to you. The will should set out how you are receive your inheritance.

The executor of the estate must calculate the "net" balance of the estate. Once that is done, any assets owned as "joint tenants" with the right of survivorship are deducted from that amount, along with any proceeds from insurance policies or retirements that state a beneficiary. At that point, you use the "Lifetime Gift Tax Exclusion and Estate / Inheritance Tax Table" and find which one works better for your situation, either the "gift tax ded." or the "inheritance tax" ded.

The amount left is your net that is used to calculate whether nor not any inheritance tax is due. If the net estate is larger than the tax exclusion, then the federal income taxes are due.

Typically under $600K to one person there should be no federal tax implication. State tax varies from state to state.

 

[wvmystichrome]

If it was a 401K or IRA and you cash it in all at once you're screwed. Ask me how I know. It happened to me. My mother had me as beneficiary on her IRA of $41,000.00. I called the IRS amd the tax accountants who were working on my mother's estate. I needed to pay off her funeral and some bills. I asked if it would hurt to cash it in. They both said NO. Then I got hit with 35% penalties and it cost me about $17,000.00 of it to the Feds and state. Take the minimum distribution on the IRA yearly so taxes don't eat you up all at once.

 

[Outlaw99]

If it was a 401K or IRA and you cash it in all at once you're screwed. Ask me how I know. It happened to me. My mother had me as beneficiary on her IRA of $41,000.00. I called the IRS amd the tax accountants who were working on my mother's estate. I needed to pay off her funeral and some bills. I asked if it would hurt to cash it in. They both said NO. Then I got hit with 35% penalties and it cost me about $17,000.00 of it to the Feds and state. Take the minimum distribution on the IRA yearly so taxes don't eat you up all at once.

damn dude that sux

 

[SolarYellow]

If it hasn't already been mentioned, your relation to the deceased also plays a roll in determining tax.

 

[FordSVTFan]

If it hasn't already been mentioned, your relation to the deceased also plays a roll in determining tax.

How you are related to a decedent is of no matter to the tax you pay. There are certain groups of immediate relatives exempted by things such as "joint tenancy" and "survivorship."

 

[SolarYellow]

How you are related to a decedent is of no matter to the tax you pay. There are certain groups of immediate relatives exempted by things such as "joint tenancy" and "survivorship."

My lawyer says something different. I inherited 50% of my grandmothers estate (other half went to my aunt) and was told we both will pay the same tax. If I was a cousin, niece/nephew, etc.., the % paid would be different.