7 Simple Ways to Minimize the Pennsylvania Inheritance Tax

1. Set up joint accounts with the people you wish to benefit.
2. Gift your assets to your children.
3. Buy extra life insurance.
4. Utilize life insurance to give money to beneficiaries who are taxed at the highest tax rates.
5. Buy real estate outside of Pennsylvania.

What is subject to PA inheritance tax?

The estate is required to file a Pennsylvania inheritance tax return and report the value of all taxable assets as of the date of death, including real estate, bank accounts, brokerage accounts, traditional IRA’s, annuities, “In trust for” accounts, automobiles, trailers, boats and all transfers within a year of death.

Do you have to pay taxes on inheritance money in Pennsylvania?

Though there is no estate tax, there is an inheritance tax in Pennsylvania. No tax is applied to transfers to a surviving spouse or to a parent from a child under the age of 21. There is a 4.5% tax applied to transfers to direct descendants and other lineal heirs like grandchildren.

When do you need to pay taxes on inheritance in Pennsylvania?

As mentioned above, the inheritance tax rate will be determined based on the beneficiary’s relationship with the decedent. In Pennsylvania, spouses and the decedent’s children that are under the age of 21 do not have to pay the inheritance tax.

Can a same sex spouse be exempted from inheritance tax in PA?

Pennsylvania currently does not exempt same-sex surviving spouses who were legally married in another state. This policy is being challenged in court by two women who were assessed inheritance tax on what they inherited from their same-sex spouses.

How is inheritance tax different from estate tax?

The estate tax is different from the inheritance tax. Inheritance taxes are taken from a person’s heirs after the inheritance has already been passed on. Though there is no estate tax, there is an inheritance tax in Pennsylvania. The percentage paid depends on the relationship between the heir and the decedent.

When to file PA inheritance tax form rev-1500?

Pennsylvania Inheritance Tax Forms Form REV-1500:If the deceased was a Pennsylvania resident, the executor must file a PA Form Rev-1500 on or before nine months after the date of death.