Inheritance Tax: The Ultimate Guide On How To Avoid Paying Steep Estate Taxes
When a loved one dies, there’s no doubt that the surviving family will experience grief and other difficult emotions. However, if the person who passed away leaves any assets behind, the IRS will waste no time coming after it. That’s why you must take care of inheritance taxes as soon — and with as much tax efficiency — as possible.
Inheritance and estate taxes are a complicated part of America’s tax code, however, like most taxes, they can be reduced or eliminated.
- Inheritance taxes and estate taxes, and their differences
- How much is inheritance taxed?
- How to minimize and avoid inheritance tax?
- What’s the best way to reduce inheritance taxes?
Though inheritance is a touchy subject, it’s a necessary conversation to have with your loved one or your financial advisor. Let’s go through the basics below.
What Are Inheritance Taxes? What’s The Difference Between Inheritance Tax and Estate Tax?
Inheritance tax is a state tax you incur when you inherit money from a deceased relative. The money you receive is from their estate, which means it’s eligible for taxation. Please note that not all states have an inheritance tax.