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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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How much (in percent) does one have to pay for inheritance

Resolved Question:

How much (in percent) does one have to pay for inheritance tax? If you pay inheritance tax on an amount, do you have to pay additional income tax on the same amount?
Submitted: 5 years ago.
Category: Tax
Expert:  Merlo replied 5 years ago.
Hello acook,

Can you tell me what state you live in?

What was the amount of your inheritance? Did you inherit cash or stocks or did you inherit money that was in a tax-deferred account such as an IRA?
Customer: replied 5 years ago.
florida
Expert:  Merlo replied 5 years ago.
Hello again acook,

There is no such thing in the US as inheritance tax at the federal level. Instead, the IRS imposes an "estate tax" on the value of any estate which has assets that exceed a certain amount. That amount is currently set at $3.5 million. So if the decedent has an estate valued at more than $3.5 million, then estate taxes are assessed against the estate itself. Once estate taxes have been paid, the remaining assets pass to the beneficiaries with no further federal tax being due.

If you inherit money that is held in a tax-deferred account such as an IRA, then you would be subject to income tax on that money when it was withdrawn from the account. However, money held in a regular savings account, cash, homes or other property are not subject to tax from the heirs and do not even need to be reported on your tax return.

There are a few states which still impose some form of inheritance tax, however, Florida is not one of them.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.


Customer: replied 5 years ago.
That was helpful, so how much estate tax would need to be paid out for 10.5 million cash, transferred from another country? Would income tax then apply? I guess I should have been more specific about my question. Thank you.
Expert:  Merlo replied 5 years ago.
Hello acook,

Is the money that is coming from another country the cash or property of a US citizen?

As a side note, were you contacted via email or phone regarding an inheritance that might be coming to you from overseas? If so, do you have personal knowledge about the person who is leaving you this money?
Customer: replied 5 years ago.

The money is coming from another country and was the property of a US citizen and my brother. It is cash.

 

I was contacted by email by his barrister (lawyer)

Expert:  Merlo replied 5 years ago.
Hello again acook,

If the property belongs to a US citizen and is valued at more than $3.5 million, then estate taxes are due. The first $3.5 million is not taxed. Anything in excess of $3.5 million is currently taxed at the estate tax rate of 45%. The balance of the estate after estate taxes are paid, then pass to the heirs with no further tax due.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 4 other Tax Specialists are ready to help you

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