The Ultimate Inheritance Tax Quiz

Staff

What's the difference between death tax and inheritance tax?

There's no difference whatsoever; they're both the same tax.

Proponents of the inheritance tax point out that it will mainly affect the:

They note that it will mainly affect the wealthy, who stand to inherit big sums of money.

In the United States, does the federal government or the state government levy the inheritance tax?

The state government levies the inheritance tax, although this has changed in recent years with some states phasing it out.

Traditionally, which body levied an estate tax?

The U.S. federal government traditionally levied an estate tax, although this has changed lately.

When a person dies and there is an inheritance, who pays the tax on it?

The heir or heirs must pay the tax according to the value of whatever they inherit.

Mr. Smith leaves half of his estate to his children and half to his brother. Who pays a higher inheritance tax -- the kids or the brother?

Actually, the poor brother pays a higher tax, because he is considered a non-lineal heir (not a child or parent of the deceased).

Who pays the estate tax?

The estate tax is paid by the executor or administrator, who uses money from the estate to pay the tax.

Following a death, what is the chronological order of the paying of taxes?

The estate tax must be paid first, then the inheritance tax is paid. Only then do the heirs lay their hands on the inheritance.

Are there any deductions or exemptions on an inheritance tax?

Yes, like with income tax, there are exemptions that reduce the amount of taxable monies.

Once heir A claims an exemption on the inheritance tax, can heir B do so?

Heir B is covered, because any number of heirs can claim their own exemptions.

How is the spouse protected after the death of a loved one?

The spouse is exempt from paying any inheritance tax, or estate tax, for that matter.

You have just inherited from a decedent who, the state determines, is your close family member. What exemption can you expect on the inheritance tax?

It's called a family exemption. If you qualify (i.e. the state deems you qualified), you may have an exemption of a few thousand dollars.

In states like Tennessee, what is the minimum inheritance requiring a tax?

One million bucks! Inherit less than that and they won't charge you a cent.

How much tax must be paid on money bequeathed to charity?

In some states, money going to charity is not taxed at all.

If the decedent had life insurance, is that money taxed?

According to most state laws, this money is not taxed.

How important is the tax bracket for your inheritance?

The tax bracket is very important. The higher it is, the more you pay.

Inheritance tax for sibling heirs is about how many times that of lineal heirs?

The inheritance tax for siblings is around three times that of lineal descendants.

Some U.S. states divide the classification of heirs into:

They divide the heirs into Class A, Class B and Class C tax rates.

After the calculation of the inheritance tax owed, you get the figure $11,749.95. How much will the Department of Revenue levy?

Most likely, the Department of Revenue will tax you a rounded $11,750.00.

Between the years 2007 and 2009, how much was the federal estate tax rate?

It was a whopping 45 percent of the total value of the assets of the estate.

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About This Quiz

You're just getting over grieving for the loss of a family member and you get a letter from the Department of Revenue regarding inheritance tax. Do you have to pay it? Are there any exemptions? How much should you expect to have to pay? See whether you know by taking this quiz.

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