If you’ve recently come into an inheritance or will be receiving one soon, you may wonder whether the assets may be taxed by federal or state governments.
Read on to learn the answer.
The federal government doesn’t impose an inheritance tax on assets received, although Pennsylvania does charge a state inheritance tax to heirs.
According to the Pennsylvania Department of Revenue, “Inheritance tax is imposed as a percentage of the value of a decedent’s estate transferred to beneficiaries by will, heirs by intestacy and transferees by operation of law. The tax rate varies depending on the relationship of the heir to the decedent.”
The following are the various rates of Pennsylvania inheritance tax:
- 0% on transfers to a surviving spouse or to a parent from a child 21 years or younger
- 4.5% on transfers to direct descendants and lineal heirs
- 12% on transfers to siblings
- 15% on transfers to other heirs, except charitable organizations, exempt institutions, and government entities exempt from tax
If you jointly own property with your spouse, that property will be exempt from inheritance tax.
Paying Inheritance Tax
When you receive an inheritance, taxes on those funds are due upon the decedent’s passing. If you don’t make the tax payments within nine months after the decedent’s passing, you’ll become delinquent.
If you make your inheritance tax payments within three months of the death of your loved one, you’ll be rewarded with a 5% discount.
We’re Here to Help
If you need assistance with an inheritance, Legacy Enhancement Trust is here to help. Our team is highly experienced in these sorts of matters and has helped many others achieve the favorable results they desired. Let our team help you with your financial goals, too. Don’t hesitate to contact our team with your case right away.