What happens if a loved one passes away, leaving you with an inheritance? Do you have to pay the taxes on it? Could you even afford to pay the taxes on it? Well, luckily for you the taxes will be taken from the estate before you receive anything. So, you don’t have to worry about paying. But, how does it all work? If you are wondering this, then you should meet with your lawyer in Tampa that deals with estate planning. They will be able to help you in understanding estate planning and even help you with your own estate plans. Your lawyer in Tampa can also inform you about the ever-changing tax laws that pertain to taxes on your inheritance. There are also different types of taxes that your inheritance can be subjected to. This includes estate taxes, income taxes, state taxes, and federal taxes. Take a look below at our little guide to give you an idea about how inheritance taxes work. Don’t forget to meet with your lawyer in Tampa in order to get their legal expertise.
Paying State Inheritance Taxes
There are only six states that have an inheritance tax and Florida is not one of them. So that is good news for you! However, if they lived in one of those six states, then their estate would be taxed. But, if you lived in one of those six states, you actually don’t have to pay the state inheritance tax either. There are certain conditions and exceptions, so speak with your attorney that is handling you estate planning needs. They can assist you in understanding how state inheritance taxes work.
Paying State & Federal Estate Taxes
The federal estate tax for combined gross assists and prior taxable gifts for 2018 is $11,180,000. If the amount you are inheriting is less than the exemption amount, then you won’t have to pay federal estate taxes. State estate taxes differ. There are only a few states that collect them. Again, Florida is not one of them. But, if the person who passed lives in one of these states, then you should consult with your attorney on what is the best course of action. Even still, if there are taxes that are owed, they will most likely be paid before you receive your inheritance.
Paying State & Federal Income Taxes
In most instances, receiving an inheritance is not considered income. Therefore you won’t have to report it on your tax return. But, receiving property is another story. These can affect your income taxes on both the state and federal level. Inherited stocks can also fall into this category. Stocks and real estate can be subjected to capital gains taxes based on certain conditions. For example, if you inherit a house that is valued for $300,000 but sell it for $400,000, then you owe a capital gains tax of $100,000.
Questions about your inheritance should be handled by qualified professionals. Check out our blog for more tips and info. Contact Fresh Legal Perspective today by calling (813) 448-1042 and ask about scheduling a consultation.