Asked 5/5/2009
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How much tax will I have to pay I have inherited 6.5 million dollars . Can you tell me how much I will have to pay in taxes and how they are to be paid. Will IRS take them upfront or will I pay at end of year. I live in Florida I don't think there is a tax on inheritance here |
Answer 1/2 - Submitted 5/5/2009
Answer 2/2 - Submitted 5/6/2009
Can't give you a definite answer from the information provided.
As far as the gross size of the estate, 6.5 million, yes there is a gross estate tax due on that amount. The executor should handle that tax before releasing the inheritance to the beneficiaries. Nothing on what's left should be taxable to the beneficiaries.
But ... if, while the executor is handling the estate, that 6.5 million earns interest of $300 thousand (let's say), then that interest would be taxable to the beneficiary. Or if the estate includes rental property, that remains rented throughout probate, that rental income would be taxable to the beneficiaries.
The distinction is this: the estate had a value on the date its owner died. That amount may be taxed as a gross estate if it large enough. That is the "inheritance" and is taxed before it is handed out. Then the estate may earn income. Someone has to pay income tax on it -- either at the estate level, or the beneficiary level. In most cases, the tax is less at the beneficiary level.
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