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Wendy Reed
Wendy Reed, Enrolled Agent
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Experience:  15+ years tax preparation and tax advice.
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In December 2007 a family friend died. A week later her ...

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In December 2007 a family friend died. A week later her husband died. They left the entire estate and bank accounts in my girlfriends name, because they have no living relatives. What type of takes, in Colorado, will we have to get prepared for in 2008 and what percent are we looking at?
Submitted: 6 years ago.
Category: Tax
Expert:  Wendy Reed replied 6 years ago.

Hello David,

Colorado has no inheritance tax, and there is no federal inheritance tax. There is federal estate tax if the estate that was left was more than 2 million, however this is per person, so the actual estate of each spouse would have to be calculated. If it is less than 2 million, no need for estate tax.

There are no income taxes on inheritance. However, the only type of inherited funds that may be subject to income tax would be tax deferred type of accounts, such as pension, 401k etc. In this case, they would be taxable in the same manner to your girlfriend as they would be to the decedent.

Customer: replied 6 years ago.
Dear Wendy Rieger,
   I got the same information over line from another person. What I was trying to get was the information of what percent I /we might be looking at when we file in 2008 for the inheritance, basing the inheritance at a minimum of 5 mil. but not a max of 20 mil. if you might be able to tell me that percentage I would accept
Customer: replied 6 years ago.
is there any one that can help me with my question that i have posted for Wendy Rieger
Expert:  Wendy Reed replied 6 years ago.

Dear XXXXX,

I am sorry, I was offline when you responded.

5 million would definitely be over the estate tax limit.

Here is a link to common estate tax questions: http://www.irs.gov/businesses/small/article/0,,id=108143,00.html

The first 2 million of estate would be exempt (assuming that the entire estate belonged to the spouse who died last, and that there was no bypass trust set up).

There are some deductions for federal estate tax. The maximum percentage is 45%.

 

Customer: replied 6 years ago.
wendy,
that information just stated if there were a surviving spouse and what was owed by desendent. in our case, neither owed anything. my girlfriend is no relation to them, would this be a gift then from them? if so is there a gift tax we have to pay?
Expert:  Wendy Reed replied 6 years ago.

Hi, I'm not sure what your question is. Was your girlfriend given property and money, or did she inherit the money and property? You stated before that she inherited. No gift tax concerns would be necessary if she inherited. However, due to the large estate size, whoever is the administrator of the estate will need to file a Federal estate tax return and pay any necessary estate taxes before the money or property is distributed to beneficiaries. The estate tax should be paid out of the funds in the estate, not directly by the beneficiaries.

Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience: 15+ years tax preparation and tax advice.
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