Legal Question in Wills and Trusts in New Jersey
follow uo to do I have to pay tax
i posted an earlier question about my mother leaving me a 15,000 policy. It was not a policy but rather an investment account. But all the other facts are the same. I was named beneficary and I paid her funeral and any outstanding debts. I kept all receipts. The IRS says I owe 5000 brcause I got an earned income credit and they say this 15,000 puts me over and I have to pay it back. Again I thought there was no inheritance tax??? help
1 Answer from Attorneys
Re: follow uo to do I have to pay tax
Whoever administers the estate is responsible to see that funeral expenses are paid directly or reimbursed to the individual who advanced those expenses on behalf of the estate.
As far as NJ inheritance tax:
If you are the beneficiary because the account was owned by your mother but you were designated as the beneficiary, you probably owe state inheritance taxes on the amount you inherited, but as a child of the deceased, according to the most recently materials I have available without further research, you should be exempted from inheritance tax.
The person who is administering the estate is liable for making the payments of inheritance taxes due, but the tax is charged based on the relationship of the person who is inheriting an asset and the value of the asset.
You would have to check with a tax specialist about if any federal estate tax is due on the estate, or if any other federal tax is due.
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