The estate tax is the tax levied on the assets inherited by the rightful heir(s) after the original owner’s demise. While there are some ways to reduce these taxes, you may be liable to pay estate taxes if your assets fall under the total values set by the governing organizations. There are two types of estate taxes — federal estate tax and state estate tax. Both carry their own implications and conditions, and it’s not always easy to understand for those not a part of the legal world.
You should hire attorneys in Johnstown, PA, to understand your situation and help you find a way to reduce your estate taxes with the right legal maneuvering.
If you are considering hiring lawyers in Johnstown, PA, you may want to know if the thresholds and rules of various estate taxes apply to your assets.
Here are some more details about who pays estate taxes and how much.
What is Estate Tax, Who Pays it, and How Much?
The estate tax, also called the death tax, is levied on the assets left behind by a deceased person to their heirs. While you are liable to pay estate taxes, a majority of the cases observed do not cross the limit set by the IRS or the Internal Revenue Service. An estate planning attorney in Johnstown, PA, will help you save on some estate and inheritance taxes levied on your beneficiaries once the assets are transferred in their name. Here are some facts about various estate taxes to help you determine if your descendants have to pay those.
Federal Estate Taxes-
The federal estate tax is calculated according to the fair market value — their value in the current market and not their original worth — by estate planning firms in Johnstown.
- The federal estate tax will only be applied if your total assets in 2022 are worth $12.06 million in their fair market value (FMV).
- Currently, federal estate taxes are levied according to the Tax Cuts and Jobs Act (TCJA) of 2017 and range from 18% to 40%.
- You can skip federal estate taxes if your living spouse inherits your assets due to the unlimited marital deduction.
State Estate Taxes-
Many states charge state estate taxes, including the District of Columbia. Each state has a different rate and exclusion value which are usually lower than the federal estate taxes.
- You may also be liable to pay the state estate taxes, for which exemption ranges from $1 million to $9.1 million.
- The state estate tax is usually charged according to the state the deceased was residing in at the time of their death.
- Owning assets in other states will make you liable to additional state estate tax liabilities.
- However, only some states charge estate taxes on assets left behind by the deceased.
- You may still be liable to pay the state estate taxes if you qualify for federal estate tax exemption.
- Your estate tax bill amount will be subtracted from the total you owe the IRS.
Having a professional law firm by your side is best to ensure finding the most appropriate solutions to your problems or concerns. The Hill Group can be your one-stop shop if you need premium services associated with several practice areas, including estate planning, Medicaid planning, special needs planning, estate administration, and elder law.