Inheritance taxes

[farmerEd]

Can someone give me the quick low-down on how these work? If someone dies, and leaves you money, what is the approximate taxes (%) that would be owed? and who pays them? Does the person who recieves the money owe taxes or just the estate?

 

[grumpy]

There are two types of inheritance tax: federal and state. The states vary widely on the tax rate, the assets that are taxed, etc. The federal estate tax has a large exemption that goes up each year until it disppears in 2010. However, if that law is not extended the federal estate tax reappers in 2011. In general, the estate pays the inheritance taxes.

Grumpy

 

[Martha]

From the IRS website, article which discusses Estate and Gift taxes and exclusion amounts: http://www.irs.gov/businesses/small/article/0,,id=98968,00.html

 

[Art]

Does the person who recieves the money owe taxes or just the estate?

The estate must file an estate tax return (Form 706, I think) but... the IRS want to get paid in cash nine months after the date of death, and they go after the beneficiaries if they have to.