Estate Taxes vs. Inheritance Taxes
When politicians talk about the “death tax,” they are actually referring to two different things: an estate tax and an inheritance tax. The federal government (and sometimes a state body) levies an estate tax based on the total value of real estate, cash, accounts, stocks and bonds, and possessions minus what creditors are paid. In contrast, the state charges an inheritance tax on what the inheritor receives in a will. Seven states currently collect this type of tax: Indiana, Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.

Calculating either tax gets tricky because of exemptions and ever-changing legislation. For smaller estates, exemptions can be relationship based or amount based. For example, in all of the states that collect an inheritance tax, surviving spouses who inherit the estate are exempt, but children may not be. Different thresholds of estate value have different exemption amounts and tax rates. An accountant with financial planning experience will keep on top of fluctuating laws and help minimize the tax burden.

About the author:
Adam Greene of Melville, N.Y., is a partner at the accounting firm Greene & Company LLC, which has provided financial services since 1986.
Estate Taxes vs. Inheritance Taxes
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Estate Taxes vs. Inheritance Taxes

When politicians talk about the “death tax,” they are actually referring to two different things: an estate tax and an inheritance tax. The feder Read More
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