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Sunday, January 16, 2011

Inheritance Tax Law 2011 & 2012

This came up in a recent conversation and there seems to be some confusion and misperception about the "Inheritance Tax." It is actually an Estate Tax.

Most people seem to believe that your taxes are paid on what you inherit. However, it is actually a tax on the Total Value of the Estate. So, for instance, under the current law, if the total value of the estate is $100,000,000, the first $5,000,000 is not taxed, but the remaining $95,000,000 is taxed at the highest current rate (Federal, State and/or Local).

Since the tax laws are always changing, please do not take this information as Gospel and confer with a qualified CPA.

To Gift or Not To Gift

The federal tax code currently exempts Gifts up to $13,000 in aggregate per individual per calendar year. Anything after that is taxable under the current federal tax law.

Individual State exemption tax rules may differ from the Federal law, so confer with a qualified CPA in your State regarding these and other rules.

IRS Link: