When do you have to pay inheritance tax ?

Question

My uncle let me some money that was in a cd. It was POD (pay on death) will I have to pay inheritance tax on POD inheritance?

Answer 1

It depends on what state you live in. Plan on paying about 10% if it's more than $500.  You do need to count it as income in your Federal Income Tax. If it is a considerable amount of money, go in for a consult with a lawyer in your state that does estate planning. Shouldn't run you more than $100. The executer of the will (the person who found you and gave you the money) would also be able to to tell you.

Answer 2

You would only owe tax for the interest it has earned since his death.  Whoever handles his last tax return would pay income tax on interest up to that point, and estate tax (if any) would be paid by the estate.

You would have to check with your state's website to see if any state inheritance tax is due.

Answer 3

There is no federal inheritance tax in the U.S. You state may have inheritance tax. Check at state web site.

For more information read: http://taxipay.blogspot.com/2008/02/tax-...

Answer 4

There are no Federal inheritance taxes.  Do NOT report the inheritance on your Federal tax return.  

Any interest that the CD earns AFTER his death is taxable income to you but the principal amount is not taxable.  If there are any Estate taxes, those would be paid by the estate.  

However if the CD was held in a tax-deferred account such as an IRA, then it would be taxed as ordinary income when you withdrew the funds since the money would have gone in tax-free.

A few states do still have inheritance taxes.  PA, NJ and LA immediately come to mind although there may be others.  His state of residence at the time of his death and your state of residence will determine if any State inheritance tax is due.