Q:

Is inheritance money taxable?

A:

Quick Answer

TurboTax reports that as of tax year 2013, only eight states require beneficiaries to pay an inheritance tax: Iowa, Pennsylvania, Kentucky, Nebraska, Maryland, Indiana, Tennessee and New Jersey. For tax purposes, unless the inheritance, such as property or stocks, generates an income, the inheritance is not subject to income taxes.

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Full Answer

According to HowStuffWorks, other taxes, such as estate taxes or capital gains taxes, may be levied against the decedent's estate before sums are distributed to beneficiaries. There are some exemptions to these taxes which may prevent the beneficiary from paying any tax on an inheritance. For example, About.com notes that for 2013, any estate that totals less than $5,250,000 is not subject to federal estate taxes.

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Related Questions

  • Q:

    How does the Canadian inheritance tax work?

    A:

    Canada does not charge any inheritance tax; however, before distributing money to inheritors, the deceased person's estate must settle final taxes with the Canada Revenue Agency, states TurboTax. These final taxes include capital gains tax on property, bonds and Registered Retirement Savings Plans.

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  • Q:

    What are Winconsin's inheritance and estate taxes?

    A:

    As of 2015, there is no inheritance tax on the property of decedents that lived in the state of Wisconsin. There are no estate taxes imposed either, though a federal estate tax is imposed on estates valued at $5,430,000 and higher in all states, according to about.com money experts.

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  • Q:

    What is the federal tax imposed upon inheritance?

    A:

    The federal government imposes no inheritance tax, although it levies an estate tax on the decedent's property, reports Bankrate. Some states impose inheritance taxes, and some impose both inheritance and estate taxes. Decedents have the ability to specify in their wills that the estate's assets should cover inheritance taxes.

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  • Q:

    What are Michigan inheritance tax laws?

    A:

    The state of Michigan levies no inheritance tax or estate tax as of 2015, reports the Michigan Department of Treasury. The only death tax for Michigan residents is the federal estate tax levied on estates worth more than $5.43 million, according to Nolo.

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