Do I Have to Pay Inheritance Tax?
For many people, the answer to this question is going to be no, but read on the find out whether you should speak to us about your situation. The inheritance tax system that used to be in place in the U.S., has been dismantled for the most part. Currently, the inheritance tax exemption for one person is generally $5 million, and $10 million for a couple. So, if you are inheriting less than those amounts, it is unlikely that you will be subject to inheritance tax, but read on to find to out more about how property is valued. Also note that there are special inheritance tax laws for non-citizens and if you are a non-citizen you should consult with a tax expert about the federal inheritance tax rates.
How the Inheritance Tax Works
First, you need to determine the value of the property when the individual passes away. There are special rules on determining value for each kind of property. For example, with real property , you need to get an appraisal from a certified real estate appraiser.
You can only begin to calculate the inheritance tax once you have totaled all the property and the sum is greater than $5 million threshold for individuals or the $10 million threshold for couples. Typically, the tax comes into play only on the amounts above the threshold; i.e. if the decedent was fortunate enough to be worth $6 million, the tax is on the additional $1 million, not the entire $6 million.
Why Are There so Many Different Kinds of Inheritance Taxes?
Actually, there aren’t. People use a lot of different terminology to talk about the same thing. There is no difference among the following terms: IRS inheritance tax, federal inheritance tax, U.S. inheritance tax, new inheritance tax. They are all the same. There is also no such thing as an independent probate inheritance tax system. In fact, the attempt to make probate filing fees depend upon the value of the estate (called progressive filing fees), was struck down as an inappropriate inheritance tax in California by the courts.
What Does Obama Have to Do with It?
There is also no such thing as an “Obama Inheritance Tax” per se. Obama gets little credit or blame, depending upon your point of view, for our current inheritance tax system. The general rule is that most states follow the federal tax rules, but we recommend consulting with an attorney or CPA to determine if your particular state follows the U.S. inheritance tax rules.
The Law Offices of David Baker can assist you with your California inheritance tax questions if you are in one of the following Bay Area locations: San Francisco, Berkeley, Albany, Pinole, Crockett, Martinez, El Sobrante, El Cerrito, Vallejo and Richmond. Call us or contact us today to discuss your situation (510) 724-2020.