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Inheritance Tax Limit
Kathryn Said:Is there currently an inheritance tax in place via George Bush?
We Answered:Inheritance Tax and Estate Tax are two different things.
Estate Tax is owed to the Federal Government on any estate valued at more than $2 million in 2008 and $3.5 million in 2009. That is paid by the estate before the estate is disbursed to the beneficiaries.
Inheritance Tax, paid on the value of the inheritance received, is a state tax paid by each beneficiary IF they live in a state with an Inheritance Tax. There are only some states with this tax. The list includes, but is not limited to: Missouri, Nebraska, New Jersey, Pennsylvania, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
The current candidates have no position on Inheritance Taxes since Inheritance Taxes are levied at the state level. Congress decides if there is a Federal Estate Tax and how much is excluded, not the president. I think that it will shake out to be no tax on estates under $5 million dollars.
Sherri Said:My sister and I look set to inherit from our father, do we both have an inheritance tax limit or is it joint?
We Answered:It is on the total value of estate. The number of beneficiaries is irrelevant. As someone previously suggested, his marital situation and history will affect it, as to whether or not it will be the double amount transferable between married couples.
Lawrence Said:what is the income limit for the first time homebuyer tax credit?
We Answered:I hope this helps.
The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.
The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.
The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.
Craig Said:What is the limit on inheritance tax?
We Answered:There is no upper limit on inheritance tax (IHT). Inheritance tax is a tax on the diminution in value of an individual's estate. When an individual dies, he is deemed to make a transfer of all his assets owned, immediately before his death.
IHT is only chargeable when the value of "gifts" made exceeds the limit for a particular tax year. Tax years run from 6 April to 5 April. The limit for the year ending 5 April 2006 was £275,000. The limit for the year ending 5 April 2007 is £285,000. The limit for the year ending 5 April 2008 is going to be £300,000. The limit for the year ending 5 April 2009 is going to be £312,000 and the planned limit for the year ending 5 April 2010 is £325,000. The proposed limits were mentioned at the time of the 2006 Budget. It is important to note that certain gifts do not give rise to IHT. For example, gifts to a spouse (who is resident in the UK) is exempt from IHT. Also, gifts to charities and political parties are exempt from IHT. There are other occassions (other than death) on which IHT may be charged - e.g. on the transfer of assets into a discretionary trust), so you should always seek specific professional advice. Regards, Gavin
Zachary Said:Tax on an indirect inheritance?
We Answered:Actually, the gift tax exclusion is $12k per year now so you are clear. However, for an example (using the old numbers) see below.
If your uncle is married, then both your uncle and your aunt can gift you $10k per year without gift tax issues. Or, if you are married, he can gift you $10k and your wife the $2k with the same outcome.
Also, the gift is not taxable in the way you are thinking. Without either of the 2 scenarios I mentioned above, the gift that is over the $10k annual limit ($2k in this case) would simply be deducted from your uncle's Estate Tax Exemption so that when he dies, if the exemption is, say $1M, then his exemption would actually be $998,000. That's all. It is not taxable to you or him on an income tax return.
I worked at a bank in Estate and Trust Taxes for 4 years.