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Difference Between Death Tax And Inheritance Tax
The death tax also known as estate tax in the United States is a tax imposed on the transfer of the ‘taxable estate” of a deceased person, whether the property is transferred via a will or according to the state laws. Inheritance tax on the other hand is the tax on the property inherited by the beneficiary of the property. |
The primary difference between inheritance tax and estate tax is where the tax burden falls, i.e. whether it must be paid by an individual heir or by the estate itself, and to whom the tax is paid. In the U.S., inheritance tax is levied by the state. The U.S federal government levies the estate tax.
Inheritance tax is a tax on the money and assets received by a beneficiary while the estate tax involves grand total of everything the decedent owned and had interest in at the time of death.
The inheritance tax rate depends primarily on the type of property being inherited and the relationship the heir had with the decedent. The estate tax rate depends on the overall value of the estate. The appraisers usually assess the fair market value of the estate’s assets and interests to evaluate the overall value of the estate.
In some states, state inheritance tax is not applicable if there is no federal tax. But in some states inheritance tax applies whether or not federal estate tax is applicable.
Federal government taxes are payable out of the money left behind in the estate or monies realized from sale of the estate or part of it. State taxes on the other hand are imposed on the individual who inherits the property. It is the responsibility of the beneficiary to file appropriate returns and remit the applicable death tax.
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Difference Between Death Tax And Inheritance Tax
