Taxes on Inheritance in Texas

[esoct25]

Can anyone explain what you pay in taxes on money and land inherited in Texas?

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[brokeno]

When Biden gets in charge figure about 70 per cent.

[Bullseye07]

A lot


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[RR 314]

A lot


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Usually $0.00

Depends on inheritance amount.

[RR 314]

Oh, should have stated that there is no Texas specific inheritance tax. All federal taxes. Generally no tax if under 12 million dollars or so. Not certain what levels are for 2021. This amount WILL almost certainly change under Biden.

[esoct25]

Thank you.

As far as Biden goes I'm thinking about quitting my job of 25 years an working at McDonald's since he wants to make minimum wage 15$. !!!!

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[sendit]

The personal life time tax exemption varies from year to year. In 2020 it was $14.5 million. As a married couple you can double that figure. The personal gift tax has been steady at $15K per year for a while now.

Even if there is not a substantial estate I would definitely be in contact with a lawyer. He or she should be able to explain things better than a interwebs forum.

[Johnny Dangerr]

The personal life time tax exemption varies from year to year. In 2020 it was $14.5 million. As a married couple you can double that figure. The personal gift tax has been steady at $15K per year for a while now.

Even if there is not a substantial estate I would definitely be in contact with a lawyer. He or she should be able to explain things better than a interwebs forum.

This.......................

[jnd1959]

Actually, it is a personal gift tax exemption of $15k. That means gifts from one person to another person under 15K during one year do not need to be reported as gifts. The actual gift tax exemption mirrors the estate tax exemption unless they are generation skipping gifts.

Another tidbit. Assets inherited get a step up in basis to the fair market value at time of death. I see a lot of older couples who say they want to sell their land and give the kids the cash. I tell them they can do that but if they allow their kids or a trust to inherit the land it can then be sold without any (or much) capital gains.

[jnd1959]

And if you have an estate that exceeds 3-5mm I would meet with my estate attorney and accountant/tax lawyer. It's probably too late now but the exemption, in my view the estate tax exemption is going to be much lower.

[220swift]

Actually, it is a personal gift tax exemption of $15k. That means gifts from one person to another person under 15K do not need to be reported. The actual gift tax exemption mirrors the estate tax exemption unless they are generation skipping gifts.

Another tidbit. Assets inherited get a step up in basis to the fair market value at time of death. I see a lot of older couples who say they want to sell their land and give the kids the cash. I tell them they can do that but if they allow their kids or a trust to inherit the land it can then be sold without any capital gains.

Biden wants to take away the step up in basis too. That would be a really big deal to many people........

[jnd1959]

Biden wants to take away the step up in basis too. That would be a really big deal to many people........

Yep. And it will hurt a lot of middle class people. These are the primary beneficiaries of the step up. Wealthy people use trusts and foundations to limit the estate tax. But assets held in an irrevocable trust do not get the step up in basis unless it was created, or funded, at death. Now if they lower the exemption and remove the basis adjustment even on assets on which you paid inheritance taxes, that would be a major beat down.

The logic of the step up and estate taxes is that you pay tax on your entire estate and therefore get a step up in basis to the market value. You then get a credit for estate taxes equal to the exemption amount. In a way, we all pay estate taxes, we just get a credit against them and end up with no estate tax bill.

[OldRiverRat]

Oh, should have stated that there is no Texas specific inheritance tax. All federal taxes. Generally no tax if under 12 million dollars or so. Not certain what levels are for 2021. This amount WILL almost certainly change under Biden.

i think i read he wants to take it to 4M

[jnd1959]

i think i read he wants to take it to 4M

That would make sense. This is a nightmare for those of us that do this planning. The idea that they would make it retroactive to the first of the year is really the killer. We had to wait until after the 1st for the Georgia election to make decisions, knowing that, if they do change it it will likely be retroactive to 1-1-21

[OldRiverRat]

That would make sense. This is a nightmare for those of us that do this planning. The idea that they would make it retroactive to the first of the year is really the killer. We had to wait until after the 1st for the Georgia election to make decisions, knowing that, if they do change it it will likely be retroactive to 1-1-21

and it's a nightmare for those of us that may be fortunate enough to inherit something that someone in our family worked so hard for just so they could leave something behind only to be taxed (again) to the point that some may not be able to keep the asset.

nothing like a liberal taking other peoples money