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How is inheritance tax calculated, on the entire amount or just the difference?
If my inheritance next year will be more than the $1million exemption will I have to pay taxes on the entire amount of my inheritance or just the amount above the allowable limit?
2 Answers
- garyg7Lv 78 years agoFavorite Answer
You don't pay the tax. The tax comes out of the estate before the money is distributed. The amount of tax depends on the total amount in the estate. For example, if the deceased had a net estate of $5 million, then the estate tax would be on $4 million. If the estate tax is 35%, then the total tax would be $1.4 million. The estate would then have $3.6 million to distribute to the beneficiaries.
I hope this helps.
Gary
- Doctor JLv 78 years ago
The amount above. Check with your accountant to make sure this is correct and to identify NOW any legal ways of mitigating some of the taxes.
Best wishes and good luck.
