Inheritance Tax USA
The concept of inheritance tax is much more prevalent in the Commonwealth countries, specifically in the UK and Ireland. Inheritance tax is not to be confused with estate tax and there are clear demarcations between these two forms. State governments are entrusted with the responsibility of collecting inheritance tax.
This form of tax was initially introduced in America because, in previous years, there were a lot of wealthy families in the country where property inheritance was not taxable. This was because the only portion of inherited property that was taxable at the time was what the estate lost to liquidation.
The imposition of this tax was a result of the government's policy of sharing of wealth. In some states, estate tax is imposed on the personal representatives of the dead person while the inheritance tax is imposed on the people benefiting from estates gained.
These states include:
- New Jersey
- South Carolina
- New Mexico
- South Dakota
The states where inheritance tax is the same as estate tax are as follows:
- West Virginia
People in United States who inherit a substantial amount of property through a legal will are required to pay inheritance tax. The asset value must be in excess of $1.5 million. Moreover, those relatives who belong to the class A category, such as a spouse, child, parent or grandchildren are not asked to pay inheritance tax. Inheritance tax is imposed by many states within the country on their own. There are a few other states, which follow federal rules so that if the federal government makes a particular inheritance tax exempt, the state government follows suit.
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Last Updated on : 5th July 2013