Do You Have to Pay the Inheritance Tax?

When someone passes away and leaves you money, you may be charged an inheritance tax by the state government. Instead of being based on the total amount of the estate left behind, this tax is based only on the portion of the estate that was left to you.

Many states have taken this type of tax off the books, but if you live in one of the following states you will still have to pay it: Iowa, Kansas, Indiana, Maryland, Nebraska, Kentucky, Oregon, Pennsylvania, New Jersey, and Tennessee.

These are the only states that still enforce this type of tax, and the exact guidelines are different from one state to another. If you are within one of these states and are uncertain how much taxes you need to pay, seek the assistance of a trained professional in your local area.

Besides considering how much money you were actually left, this type of tax also takes into consideration the relationship you shared with the person who is now gone. If you were related by blood or marriage, you are likely to pay a lot less than if they were unrelated to you.

Since a married couple usually shares ownership of property and assets, you will not have to worry about the inheritance tax if a spouse leaves you the money.

In the case your parent has left you some money, you will usually be allowed a certain amount that is automatically tax deductible. Anything that you receive beyond that amount will be subject to the tax, but at a much lower rate than others who are not children of the deceased will be charged.

If someone unrelated to you has left you money, then you will be charged a higher percentage for the inheritance tax. Usually, none of the money will be considered tax deductible in this case. Though, it still doesn't quite take away the sting of paying these less than popular taxes.