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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
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Experience:  35 years tax experience, including four years at a Big 4 firm.
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Hi, Does Kansas have an inheritance tax. would it apply to

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Hi, Does Kansas have an inheritance tax. would it apply to someone living in Arizona?

If person living in Arizona had taxes prepared in Kansas, because of income received from Kansas. Would the inheritance tax be imposed on all other income not matter where it came from when inherited, because of the location of the tax prep.

Is there an amount you can receive before the inheritance tax is imposed?

PDtax :

Welcome to the site. I'm PDtax, and will be helping you today.

PDtax :

Kansas does have an inheritance tax, but it is paid by the estate, not the recipient. That is a recent tax law change (2010).

PDtax :

Where you are doesn't matter. The estate will pay the taxes if a tax is due, and liquidate assets or distribute them outright to beneficiaries. You don't have a tax to pay. The estate may not have a tax to pay at all, depending on the size of the estate.

PDtax :

Sorry, I got some bad information initially. Kansas repealed its estate tax for 2010 and years after that (http://www.ksrevenue.org/taxnotices/notice10-07.pdf). No tax will be due by you or the estate on your 2013 inheritance.

Hi Linda,

I had to switch to Q & A format. Please advise if you have any follow up questions.
Customer: replied 3 years ago.

Hi, sorry for responding so late.. had to go to sleep


Just to make sure I understand correctly. Kansas does have an inheritance tax, that is paid by the estate.


Kansas does not have an estate tax. after 2010.


 


back to the question regarding inheritance tax. I am next trustee. I live in Arizona. Have income from Kansas. and other areas. tax was filed in Kansas because of the amount of income received. Yes the estate would pay the inherence tax. Would it be better for me to file in Arizona where there is not inheritance tax?

Sorry for the confusion. Kansas does not have an inheritance tax. The first source I looked at was incorrect.

I would file a Kansas estate tax return if there are assets that would benefit from a step up in basis, like real property or investments. There won't be a tax to pay, but the reported increases in asset bases will be valuable when the beneficiaries sell the assets in the future.

You do not file anything in Arizona for your inheritance. Your personal tax return in Arizona can include your income from Kansas and elsewhere, but not the inheritance, unless you receive special assets, like an IRA.

Thanks for asking at Just Answer. I'm PDtax.
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Customer: replied 3 years ago.



Customer: replied 3 years ago.

Hi to continue on with which state to file in.


If I filed in Arizona, would not the Kansas property get an step up in value any way?

The state to file an estate tax return is the decedent's state of residence, not yours.
Customer: replied 3 years ago.

I am decedent's daughter. we live in same state.


would not the Kansas property receive a step up in value when she passes no matter what state the taxes are filed in.

"If person living in Arizona had taxes prepared in Kansas, because of income received from Kansas. Would the inheritance tax be imposed on all other income not matter where it came from when inherited, because of the location of the tax prep." is your original question.

Since the decedent was living in Arizona, and had nonresident Kansas income, I suspect the decedent has Arizona residence, and Arizona estate law likely applies, even if the property is Kansas sited.

Your step up basis question is valid. Without an estate tax, assets get the opportunity for a step up in basis anyway, depending on the size of the estate. Arizona, piggybacking on Federal estate tax law, effectively repealed their estate tax for years after 2004.

If the estate has assets under $1,300,000, you will still get a step up in basis up to fair market value, even with an Arizona estate.

PDtax

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