Estate Taxes: How Do They Affact You

Sometimes, after a loved one dies, you may find that you are the person whom they have chosen to receive their estate. And, while finding out that you’ve inherited an estate can be flattering and exciting, keep in mind that taxation does apply.   

Federal Taxation

You may be able to skip out on federal taxation if the estate does not have a high value.

In general, federal taxes usually only apply if your estate’s value is over $11.4 million. The value over this amount is what is taxed. If you’re unsure about your estate’s value or if you need to pay taxes or how much, be sure to contact a financial professional for guidance.

State Taxation

When you inherit an estate of any value, you may have to pay state taxes. These taxes exist in thirteen different states. However, exemptions do apply based on the worth or value of your estate. The tricky thing, though, is that exemption amounts vary from state to state.

So, if you find that your state does have an estate tax, you’ll probably need some professional help to determine how much you owe.

If your estate has to pay anything to the state, deductions are allowed, which can help with any federal taxes that may apply. However, it’s still a good idea to seek professional tax help if you find yourself in this situation. That way, you can avoid errors and ensure you pay what you’re supposed to.

Being excited when you receive someone’s estate is normal. However, don’t get so excited that you neglect any tax responsibilities that may apply. In fact, as soon as you find out about your inheritance, the best course of action is always to consult a tax professional.