Q:

Is inheritance money taxable?

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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:

    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:

    How do you file federal taxes on an inheritance?

    A:

    The federal government levies no inheritance tax, reports Bankrate. Federal estate tax is levied on gross estates worth more than $5.43 million as of 2015, and the complex returns should be handled by both attorneys and Certified Public Accountants or Enrolled Agents, according to the IRS.

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  • Q:

    What are the opinions on the inheritance tax rate in Illinois?

    A:

    The state of Illinois has no inheritance tax. The death tax imposed by Illinois is an estate tax, and only estates with a value of more than $4 million are subject to it as of 2015. Even estates worth over $4 million may escape the tax due to deductions.

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  • Q:

    How much money do you have to make to file taxes?

    A:

    For the tax year 2014, taxpayers under the age of 65 who are single must file a tax return if they make more than $10,150; this figure is the total of the 2014 standard deduction plus one exemption, according to Turbo Tax. In general, if the total income for the year does not go over the standard deduction for that tax year plus one exemption and the taxpayer is not the dependent of another, then filing a tax return is not mandated under the Internal Revenue Code; however, the income threshold required also depends on age, filing status and income type.

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