Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.
I am not personally located in PA, however your question relates to a Federal Tax, (there is no state gift tax in PA).
I can assure you that there was a gift tax in 2010. Your friend is probably confused between estate tax and gift tax (the two systems are related). There was no estate tax in 2010 (although retroactive provisions were made at the beginning of 2011 for 2010.)
The presence or absence of estate tax in 2010 does not affect the gift tax. The gift tax exemption for 2010 was $13,000, as it is in 2012.
Please let me know if you have additional concerns.
Let me try this again. I know there is NO Fed. tax.....not the question.
I was given a large sum in 2010 by my live-in compainion. He passed in 2011. Now his estate wants me to pay them 15% tax on the money (less $13,000) without seeing an estate tax form. I am refusing...but still not sure if there even was a tax let alone the amount or how it should be paid?
I see, I am sorry I was not aware of this to begin with. This is actually inheritance tax, not gift tax, because PA has a 1 year "look back" from the year of death which enables them to tax any gifts given in that period. (despicable, I know)....
Here is information from the inheritance tax return instructions:
1. TRANSFERS MADE WITHIN ONE (1) YEAR OF
Such transfers by a decedent are subject to tax to the extent that
they exceed $3,000 at the time of the transfer. If a combined total
of all transfers per transferee during any calendar year exceeds
$3,000, exclusion may be claimed. For example, if the decedent
transferred $10,000 within one year of his death, $7,000 would
be subject to Inheritance Tax."
To my knowledge, the amount minus $3000 is taxable, at the rate of 15%. I am unaware of any provision for a gift made in 2010 not to be included in the 2011 inheritance tax.
I am sorry that this happened to you, and my condolences on your loss.
Thank you for trying but how can it be "Inheritance" tax? We were not related in anyway. I lived with him and took care of him the last year or two of his life...but that is not a reason to want to help someone out it seems with this daughter/estate!
PA Attorneys and CPA both tell me it is not "inheritance". Where do I go too get an ansewer from someone who is sure before this ends in a court?
Wendy only: I don't believe I said I was "not satisfied" with what you told just that I am not sure an out of state CPA knows PA law.
Did you get the message I sent about what the Will said?
What has happened to this site? When I first signed up I got ths same person and could ask many questions at a time. Now even when I ask for someone special I will get an answer from a new person? Not your fault...just wondering?
I am sorry for any confusion. The goal here is for you to be 100% satisfied with your answer, and if you are not, you have the right to have other experts answer. We experts also review each other's work, and I have not gotten any reports that another expert disagreed with my response.
As for your other question,,,,it went into Estate Law, and I am not an expert in that category, so I was unable to answer---but I did read the exchange. Unfortunately, there does not appear to be a tax clause in the will...and since the gift was given outside of the estate (prior to death) the recipient of the gift is technically responsible for the tax. I understand that the decedent did not intend for you to pay any tax, and it would be really nice if the estate would pay the tax on the amount, but apparently they are paying hardball and don't want any of their inheritance diminished. Look at it this way, if the decedent left you the money in the will, then the tax would have been paid out of what was left to you, before it was transferred to you. This way of course is harder to take, because now they want tax almost a year after you were gifted this money. I think it is awful, and PA is one of the states I will never move to when I retire because they grab every cent from honest individuals with these kinds of taxes.