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Do I Pay Taxes When Someone Leaves Me Money

In this presentation, we will look at a number of different taxes. Learn more about taxes in this presentation.

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Do I Pay Taxes When Someone Leaves Me Money

  1. 1. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF DO I PAY TAXES WHEN SOMEONE LEAVES ME MONEY?
  2. 2. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF TAXES ON INHERITANCES You may wonder about the taxes that you may face if you receive an inheritance.
  3. 3. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF In this presentation, we will look at a number of different taxes.
  4. 4. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF INCOME TAXES Since the IRS wants you to report all sources of income, you may assume that you have to include an inheritance when you file your returns.
  5. 5. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF In fact, an inheritance is not considered to be taxable income.
  6. 6. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF CAPITAL GAINS TAX
  7. 7. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF The capital gains tax is applicable when a gain is realized
  8. 8. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF You realize a capital gain when you sell an asset that appreciated while it was in your possession.
  9. 9. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF STEP-UP IN BASIS
  10. 10. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF Inherited assets get a step-up in basis for capital gains purposes.
  11. 11. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF This means that the inheritor would not be responsible for the gains that took place during the life of the decedent.
  12. 12. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF The capital gains tax could be applicable in the future if the assets continue to appreciate while they are in the possession of the inheritor.
  13. 13. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF FEDERAL ESTATE TAX
  14. 14. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF So far, the news has been good, but now we have to look at the other side of the coin.
  15. 15. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF There is a federal estate tax that can enter the picture, and it carries a 40 percent maximum rate.
  16. 16. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF Fortunately, most people do not pay the tax, because it is only applicable on transfers that exceed $5.45 million.
  17. 17. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF MARYLAND STATE ESTATE TAX There is another advance directive for health care that should be executed called a durable power of attorney or health care proxy.
  18. 18. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF We practice in Maryland, and our state has an estate tax on the state level.
  19. 19. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF This tax can be applied on the portion of an estate that exceeds $2 million in 2016.
  20. 20. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF STATE LEVEL INHERITANCE TAX Maryland also has a state level inheritance tax.
  21. 21. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF This tax can be applied on transfers to each nonexempt inheritor.
  22. 22. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORFHowever, close relatives are exempt.
  23. 23. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF TAX EFFICIENCY STRATEGIES Maryland also has a state level inheritance tax.
  24. 24. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF There are tax efficiency strategies that can be implemented when an estate is subject to taxation.
  25. 25. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF The ideal course of action will depend upon the circumstances.
  26. 26. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF OUR FIRM CAN HELP
  27. 27. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF We can help if you would like to discuss your objectives with a qualified estate planning attorney.
  28. 28. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF Feel free to send us a message if you would like to set up a consultation.
  29. 29. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF If you are ready to get started, contact us to set up a consultation.
  30. 30. ANNAPOLIS • MILLERSVILLE • BOWIE • WALDORF Or visit our website www.sinclairprosserlaw.com Nicole Livingston Jon J. Gasior Colleen SinclairProsser Victor A. Lembo

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