Today TaxMama hears from Marvin in Washington, who asks. “Does IRS tax inheritances? If so, how much is taxed? I expect to inherit $1 million soon. How much tax must I pay?”
IRS does not tax inheritances.
IRS taxes estates. The dead folks pay any taxes due. Not you.
The heirs get the assets free and clear.
Unless they are IRAs – but that’s a whole other story.
Which you can read about here if you have nothing better to do
But even estates don’t pay taxes on $1.5 million (last year),
or $2 million this year.
Here are the current Federal estate tax tables and the amount excluded all the way up to 2009. In 2010 there will be no estate tax at all. So, that’s a good year for really, really rich people to die.
So, on your measly million, neither you nor the estate will have to pay any estate taxes – at least not to IRS.
I don’t know the estate tax laws in WA.
And uh, will you consider adopting me?
Remember, you’ll find answers to questions about estate taxes and all kinds of tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d learn about something IRS has done to catch problems with the tax system. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- TaxMama.com :: Pitfalls of Inherited IRAs
- Small Business Taxes & Management :: Estate Tax Tables and Rates