inheritance tax PhiladelphiaDid you know that Pennsylvania is one of only six states that have an inheritance tax? Different from estate tax, an inheritance tax is paid by the beneficiary. However, not all beneficiaries are obligated to pay and the tax rate varies depending on your relationship to the deceased party. An expert in attorney Jeff First is here to help you make sense of all the nuances of the inheritance tax and to whom it applies.

What is an Inheritance Tax?

An inheritance tax is a tax owed by the beneficiaries of an estate. And, while the beneficiary is required to pay the tax, most often the personal representative, also known as the executor of the estate, files the tax return. The return must be filed within 9 months of the decedent’s death or you may be responsible for interest and penalties on whatever you inherit. If you need to file inheritance tax, Philadelphia-based law firm, Jeff First Law, can help.

Who Pays Inheritance Tax?

In Pennsylvania, there are various tax rates applied to beneficiaries depending on their relationship to the decedent. Charitable organizations, some exempt institutions and government entities aren’t required to pay inheritance tax. Additionally, real estate owned jointly by a spouse is exempt. If you’re a Pennsylvania resident and one of the following types of beneficiaries, you are required to pay Pennsylvania’s inheritance tax, Philadelphia residents included:

  • Lineal heirs and direct descendants pay a rate of 4.5%. Lineal heirs include grandparents, fathers, mothers, children and stepchildren, regardless of adoption. Direct descendants include the decedent’s children, grandchildren, great-grandchildren, etc.
  • Siblings pay a rate of 12%
  • Other heirs such as friends or distant relatives pay 15%
  • Surviving spouses and parents of children 21 or younger are not listed as exempt, but have a 0% tax rate

How Jeff First Law Can Help

Our attorneys are experts in estate law and can guide you through this sometimes-complicated process, from probate to filing your inheritance tax return. In fact, if you’re a beneficiary or an executor, we may be able to save you money by helping you file your inheritance tax return early enough to receive a discount. Learn more about our services, send us an email, or give us a call at 215-307-3939 to speak with an attorney today.

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