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Subject Author Date
NJ Inheritance ax? Healthy Stealthy 01-12-2008
`--> Re: NJ Inheritance ax? Benjamin Yazers...01-16-2008
Posted by Healthy Stealthy on January 12, 2008, 1:38 pm
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 Hello,

If a father has a home and wants to pass it to his two daughters after
he dies, do those girls have to pay an inheritance tax? Is there
anyway to not have this happen?

Thank you.

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Posted by joetaxpayer on January 12, 2008, 3:26 pm
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Healthy Stealthy wrote:
> Hello,
>
> If a father has a home and wants to pass it to his two daughters after
> he dies, do those girls have to pay an inheritance tax? Is there
> anyway to not have this happen?
>
> Thank you.

I live in Massachusetts, so i looked at the Google and found on nj.gov,
http://www.nj.gov/treasury/taxation/index.html?ot7.htm~mainFrame

Which states; If a decedent's death occurs on or after July 1, 1988,
property passing to a decedent's surviving parents, grandparents,
children, stepchildren or grandchildren is entirely exempt from the tax.
This is for the inheritance tax. The estate tax is a bit more complex,
but appears to depend more on the size of the estate. So further details
on the total estate value would be needed to answer, or you may read the
details at the link I posted.
JOE
www.blog.joetaxpayer.com

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Katie on January 14, 2008, 7:09 pm
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wrote:
> Hello,
>
> If a father has a home and wants to pass it to his two daughters after
> he dies, do those girls have to pay an inheritance tax?  Is there
> anyway to not have this happen?
>


The NJ estate tax is a "pickup" or "sponge" tax that originally was
designed to pick up the credit that was allowed under the federal
estate tax law for state death taxes. After the federal credit
started to phase out, NJ amended its law so that it picks up the
credit for state death taxes that would have been allowed under the
federal law as it was in effect as of December 31, 2001. At that
time, the federal unified credit for estate and gift taxes covered the
first $675,000 of the tax base (it's $1 million now, for federal
purposes). So you have to calculate the federal estate tax that would
have been due if the decedent had died on December 31, 2001, and the
maximum credit for state death taxes that would have been allowed at
that time. No point in going through that exercise if the estate,
plus any gifts that absorbed any of the unified credit during the
decedent's lifetime, totals more than $675,000.

Of course, assuming the father in your example is still living, these
rules may change between now and the date of his death, depending on
whether the federal estate tax "comes back" after 2011 and if so,
whether it incorporates a credit for state death taxes again.

As Joetaxpayer noted, bequests to lineal ancestors and descendants are
not subject to the NJ inheritance tax.

Katie in San Diego

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Katie on January 14, 2008, 8:00 pm
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> wrote:
>
> > Hello,
>
> > If a father has a home and wants to pass it to his two daughters after
> > he dies, do those girls have to pay an inheritance tax?  Is there
> > anyway to not have this happen?
>
> The NJ estate tax is a "pickup" or "sponge" tax that originally was
> designed to pick up the credit that was allowed under the federal
> estate tax law for state death taxes.  After the federal credit
> started to phase out, NJ amended its law so that it picks up the
> credit for state death taxes that would have been allowed under the
> federal law as it was in effect as of December 31, 2001.  At that
> time, the federal unified credit for estate and gift taxes covered the
> first $675,000 of the tax base (it's $1 million now, for federal
> purposes).  So you have to calculate the federal estate tax that would
> have been due if the decedent had died on December 31, 2001, and the
> maximum credit for state death taxes that would have been allowed at
> that time.  No point in going through that exercise if the estate,
> plus any gifts that absorbed any of the unified credit during the
> decedent's lifetime, totals more than $675,000.
>
> Of course, assuming the father in your example is still living, these
> rules may change between now and the date of his death, depending on
> whether the federal estate tax "comes back" after 2011 and if so,
> whether it incorporates a credit for state death taxes again.
>
> As Joetaxpayer noted, bequests to lineal ancestors and descendants are
> not subject to the NJ inheritance tax.
>
> Katie in San Diego
>


Oops, I meant you needn't bother if the estate tax base totals LESS
than $675,000, not more!

Katie in San Diego

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Benjamin Yazersky CPA on January 16, 2008, 9:19 am
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wrote:
> Hello,
>
> If a father has a home and wants to pass it to his two daughters after
> he dies, do those girls have to pay an inheritance tax? Is there
> anyway to not have this happen?
>
> Thank you.
>
> --



NJ has both and estate tax & an inheritance tax.
The estate tax applies if the taxable estate is $675,000
The inheritance tax applies depending on the class of beneficiary
Lineal decendents are not subject to the inheritance tax.



<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----





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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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