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Paying taxes on inheritance
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Hi everyone! I’m starting to file my taxes this year but have run into a situation I’m a bit unsure about.
Last year, my grandmother passed away and I was listed as a beneficiary in her will. My mom worked to sell my grandmother’s house and when it sold she wired the money to all beneficiaries. The house was my grandmother’s primary residence if that matters at all. Her residence was in Maine and I live and work in NH.
So.. long story short, I’m having trouble figuring out if I’ll need to pay taxes on the money I received. Any and all info you may be able to provide would be appreciated!
Top Comment: I’d start here https://www.irs.gov/help/ita/is-the-inheritance-i-received-taxable
Haven’t seem discussion about state estate taxes here. Are people really considering retiring in states like WA, OR, or MA?
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Once in a while discussion comes up about the federal estate tax, but nobody ever seems to talk about state-specific estate taxes.
I believe WA has one at rates between 10%-20% on amounts over $2.2 million. This seems insane to me. I suppose it depends on your net worth when you die, but the thought of dying with $15 million, for example, and seeing between $1 million and $2 million go straight to the state makes me ill. Especially when this could have been avoided by retiring somewhere else.
While we’re currently in such a state, you can bet we’re moving out once we’re done with work. Are others considering this, or are your roots too deep to move?
Top Comment: For some, one of the benefits of getting to Fat is the ability to live where you want and not have to worry about moving to avoid taxes. When I retire, I could potentially move so I do six months in a state like FL, but I’m not into places that are hotter than the surface of the sun so I won’t.
How does federal inheritance tax work if someone inherits 20m+ in leased NNN commercial real estate?
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My fathers health is deteriorating and my eldest brother who was to succeed him passed away recently. My mother is not suited to handle the business affairs and being the only child remaining my father has told me I will solely be responsible for the family real estate moving forward. This is a total of about 15 properties valued around 27m dollars returning about 7.5% annually in a state with no inheritance tax or income tax.
I have read that federal inheritance tax kicks up to 40% after the 11m marker and considering this I have set an appointment with a real estate tax specialist who can help with estate planning as well. However, I would like to go into these meetings with a better baseline understanding of what I should be asking, and additionally, to hear the experience of others who may have had a similar situation in the past or have succession plans of their own I can gain knowledge from to plan for the future.
Top Comment: Send Pace Morby a message on Instagram and get his take on things he can help guide you in the direction you need and point you to the right people. He will respond and has created a single family and commercial real estate empire. He's legit and have hung out with him and his team several times. He's a huge go giver and has an amazing community setup.
Why is inheritance tax so controversial?
Main Post: Why is inheritance tax so controversial?
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Can someone explain to me what Kamala is proposing regarding inheritance tax?
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My mother is sending me multiple news articles about Kamala’s tax plans. I don’t fully understand, but my mom is concerned I will get almost no inheritance now. My father owns a handful of land/rental properties and a small business ( ~ 20 employees). Can someone explain to me like I’m dumb how this would impact my inheritance? (I’m lowkey financially illiterate)
I also quit working full-time 2 years ago when I had my 2 kids. I work part-time now but don’t have an employer-matched retirement plan anymore. I contribute what I can but it’s not much at all. Should I consider re-entering the workforce full time for a retirement plan considering I may not get much inheritance now? (according to my mom)
Top Comment: Someone might be able to explain the actual proposed ideas but, I just want to add, there's nothing to worry about. Every politician says a whole bunch of stuff that they then aren't able to do. Your mom might be talking about the idea to lower estate tax threshold from~$13.5 Million to ~$5.6 Million. I imagine getting over $5 million tax free wouldn't ruin your inheritance. You'd also just be taxed a bit on amounts over that. It's not like you wouldn't get it. If your mother is really concerned, talk to an estate planner. They might be able to make decisions now that'll better set you up for the future. Link to some of the proposed ideas. Read replies.
Why are some taxes, like estate taxes, considered a double tax?
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It seems like money is taxed whenever it exchanges hands (approximately). So when I get a paycheck, I pay income taxes; when I spend the money, I pay a sales tax. No one says that the money has been taxed twice, yet when it comes to inheriting money, I'm told that it's a form of double-tax.
Is that actually true? If so, what forms of taxes fall into this category of a double-tax? And what is the distinction between these, and other taxes that occur when money exchange hands?
Top Comment: Many things are taxed twice or more. Yes, sales tax and income tax is essentially taxing the same money twice...albeit not *all* of the money, because some money is invested instead of spent. So it's not exactly a double tax, but it's very close. Consider, if you use your income(taxed) to buy property, it'll be routinely subject to property taxes, and if you sell it/pass it down in inheritance, it may* be taxed yet again. So, it's possible for a home or other property to be triply taxed. *Some exemptions do exist, depends on circumstances.
Beneficiary vs Estate Tax?
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Hi there,
This really does not apply to me or my family since we don't have that kind of money, but the thought occured to me and am now curious.
Since it seems having a "beneficiary" on accounts (say stocks with Fidelity" sidesteps the need for probate, does that also sidestep the "estate"? For arguments sake, let's say my parents have $50mm in stocks and I am the account beneficiary. Does that mean the entire $50 mm worth would pass to me with no estate tax on the amount over the combined $27.2mm exemption? (Also assume no state tax). Seems like too convenient a loophole. Or am I thinking about this incorrectly?
Thanks!
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Top link on Google
https://www.investopedia.com/transfer-on-death-cd-taxation-5295869
Putting TOD beneficiaries on accounts does not mean that you or your heirs avoid estate taxes.
How is Death Tax legal?
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It’s such a crude use of power. It’s in multiple countries. I guess I’m just curious why this is a thing, and what the purpose of it is other than the obvious one. (Insert MR Krabs meme saying “money”)
Is it more of a speed check on high earning lineages to keep them from gaining too much power?
Any hot takes I haven’t considered?
Top Comment: I mean to start the basic answer, it is legal because society has decided it’s legal. That’s the short answer. As for WHY? You mean like estate taxes right? Yes it’s to take some wealthy from the very wealthy and redistribute it a bit. And I say very wealthy because not everyone pays estate taxes, you need to be giving your kids over like $13 million in assets when you die for estate tax to kick in. Your average family is not going to have that.
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Top Comment: State taxes Avoiding Probate Ease of administration depending on circumstances Spendthrift concerns
The Estate Tax: What is it, who does it affect, and why is it so controversial?
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My question concerns the difference in interpretation of the Estate (Death) Tax. Democrats and republicans seem to view it very differently, and I would like an r/NeutralPolitics view.
IRS explanation of the estate tax.
Republicans argue that small businesses and family farms will be most affected because the 'super rich' are able to avoid it. Democrats argue that only 0.2% of Americans are affected by this tax. So who will it really affect? Does it deserve the popular name 'Death Tax'?
Top Comment: So there's two taxes that can be assessed as part of someone dying: estate taxes and inheritance taxes. An estate tax is a tax assessed on all of the money and other assets of value one has when one dies. So for instance, if there is a 20% estate tax with a $100,000 exclusion, and I die with $1 million in assets, $180,000 is paid to the government before my heirs get anything. In contrast, an inheritance tax is a tax on the heirs themselves in proportion to what they receive from the estate. So for instance, if there was a 20% inheritance tax with a $100,000 exclusion and you gave out that $1 million estate equally to each of your 10 grandchildren, they'd pay nothing. If you split it equally 5 ways, each of them would pay $20,000. The US has an estate tax with a very high exclusion of $5.45 million. So only people who die and own more than $5.45 million in assets are subject to it. Because the exemption is so large, it is estimated that about 120 returns a year are filed which are subject to the estate tax and where the farm or small business constitutes more than half of the assets. That would be 0.0046% of the 2.6 million deaths per year in the US. The number of farms and small businesses which could plausibly be forced to be sold because of this is really really small, and that Washington Post piece indicates that nobody in several years has been able to find an example of a farm needing to be sold to pay estate taxes. Having enough assets at death to be subject to the tax would put you somewhere between the 95th and 99th percentile for net worth. Additionally, there are a number of mechanisms that can be used to avoid the tax, most prominently irrevocable trusts which generally are not considered part of the taxable estate.