There is a state estate tax in New York, and the exclusion is about half of the current federal exclusion. We are not providing an exact figure because it is adjusted annually. The entirety of your estate would be subject to the tax if its value is at least five percent more than the exclusion. If you happen to own property in another state with an estate tax, that tax would be applicable, but its value would have to exceed the exclusion in that state. The state-level exclusions are … [Read more...] about Is there a state estate tax in New York?
Taxes on Inheritances
There has been a gift tax in place continuously since 1932, and it was unified with the estate tax during the 1970s. The aforementioned multimillion dollar exclusion as a unified exclusion that applies to lifetime gifts and your estate. However, there is an additional annual gift tax exclusion that sits apart from the unified exclusion. You can use this exclusion to give as much as $15,000 to any number of people in a calendar year tax-free. There is an educational exclusion as well. If … [Read more...] about Can you give gifts to avoid the estate tax?
The answer to this question is probably not. There is a federal estate tax exclusion that can be used to transfer a certain amount before the tax would become applicable. It has been at least $5 million since 2011, and it was raised to $11 million adjusted for inflation for the 2018 calendar year. The exclusion is scheduled to go back down to the $5 million mark adjusted for inflation at the end of 2025. There can be changes in the meantime via legislative mandate, so this trajectory is … [Read more...] about Will the federal estate tax be applied to my estate?
If you inherit assets that appreciated during the life of the person that left you the inheritance, you would get a step-up in basis. You would not be responsible for those gains, but you would have to pay capital gains taxes on future appreciation if and when you realize a gain. The utilization of the step-up in basis can be an effective estate planning strategy. There are some lawmakers that want to eliminate the step-up in basis, so this is a looming possibility. … [Read more...] about Do you pay capital gains taxes on inherited assets?
It depends on the type of account that is inherited. The beneficiary of a traditional individual retirement account would be required to report the income. Roth account beneficiaries receive tax-free distributions. This arrangement is based on the tax fact that Roth individual retirement accounts are funded after taxes have been paid on the income. Traditional account holders contribute into the accounts before they pay taxes. … [Read more...] about What about individual retirement accounts?
No, direct inheritances are not considered to be taxable income, and this would apply to life insurance proceeds. … [Read more...] about Do you have to claim an inheritance when you file your annual income tax returns?