Inheritance Tax in the United States
The United States impose on the federal level, the federal estate tax . Since the tax taxes the undivided estate and not the acquisition, the tax is referred to as the estate tax in German-language literature. Estate tax is regulated in the Internal Revenue Code . Some US states also levy taxes on acquisition due to death. An overview of this is given below.
Personal tax liability
The worldwide estate of the testator is taxable in the US if the testator is
- US citizens (“citizen”) or
- Was a foreigner ("alien") residing in the USA ("residence").
Otherwise, only US assets will be taxed; this includes physical assets in the United States (e.g., land); in addition, certain assets are always assumed to be US assets, e.g. B.
- Shares in a US corporation,
- Revocable property transfers took place in the three years prior to death if the item was either in the United States at the time of death or transfer and
- Claims against an American debtor (e.g. from a pension savings plan).
Allowance
The general tax exemption is called Unified Credit .
- For deaths in 2011, the unified credit was $ 5,000,000.
- For deaths in 2012, the unified credit was $ 5,120,000.
- For 2013 deaths, the Unified Credit was $ 5,250,000. and
- For deaths in 2014, the unified credit was $ 5,340,000.
With limited tax liability, the exemption is only $ 60,000.
The tax exemption applies not only to the estate, but also to all gifts.
Tax exemption for the spouse
Spouse benefits are tax-exempt if they are US citizens. If the surviving spouse is not a US citizen, the exemption is only granted if a QDOT Trust is established so that the spouse cannot freely dispose of the assets and cannot get it out of the US untaxed. In the case of references to Germany, however, the establishment of a QDOT trust can have undesired tax consequences.
tax rate
For deaths in 2013, the exemption is shown in the following table:
| From an amount of | to | is the basic amount | Tax rate above |
|---|---|---|---|
| $ 0 | $ 10,000 | $ 0 | 18% of the amount |
| $ 10,000 | $ 20,000 | $ 1,800 | 20% |
| $ 20,000 | $ 40,000 | $ 3,800 | 22% |
| $ 40,000 | $ 60,000 | $ 8,200 | 24% |
| $ 60,000 | $ 80,000 | $ 13,000 | 26% |
| $ 80,000 | $ 100,000 | $ 18,200 | 28% |
| $ 100,000 | $ 150,000 | $ 23,800 | 30% |
| $ 150,000 | $ 250,000 | $ 38,800 | 32% |
| $ 250,000 | $ 500,000 | $ 70,800 | 34% |
| $ 500,000 | $ 750,000 | $ 155,800 | 37% |
| $ 750,000 | $ 1,000,000 | $ 248,300 | 39% |
| $ 1,000,000 | about that | $ 345,800 | 40% |
Submission of the tax return
The personal representative appointed by the probate court must declare the tax to the Internal Revenue Service (IRS) using Form 706 or Form 706-NA (Non-Resident-Alien) within nine months of death .
State law
The following states currently have estate or inheritance taxes:
| State | Type of tax | Allowance (in US dollars) | Tax rate | Evidence, note |
|---|---|---|---|---|
| Connecticut | estate | 2,000,000 | up to 12 % | |
| Delaware | estate | 5,340,000 | up to 16 % | |
| Illinois | estate | 4,000,000 | up to 16 % | |
| Iowa | inheritance | 0 | up to 15 % | |
| Kentucky | inheritance | 500 | up to 16 % | |
| Maine | estate | 2,000,000 | up to 12 % | |
| Massachusetts | estate | 1,000,000 | up to 16 % | |
| Maryland | estate | 1,000,000 | up to 16 % | |
| Maryland | inheritance | 150 | up to 10 % | |
| Minnesota | estate | 1,200,000 | up to 16 % | |
| Nebraska | inheritance | 10,000 | up to 18 % | |
| New Jersey | estate | 675,000 | up to 16 % | |
| New Jersey | inheritance | 0 | up to 16 % | |
| new York | estate | 2,062,500 | up to 16 % | Minimum: 5.085% |
| Oregon | estate | 1,000,000 | up to 16 % | |
| Pennsylvania | inheritance | 0 | up to 15 % | |
| Rhode Island | estate | 921,655 | up to 16 % | |
| Tennessee | inheritance | 2013: 1,250,000 2014: 2,000,000 2015: 5,000,000 |
up to 9.5% | The tax will be abolished in 2016. |
| Vermont | estate | 2,750,000 | up to 16 % | |
| Washington | estate | 2,000,000 | up to 19 % | |
| Washington DC | estate | 1,000,000 | up to 16 % |
The tax can be offset against the Federal Estate Tax up to certain maximum amounts.
Avoidance of double taxation through double taxation agreements
There is a double taxation agreement between Germany and the USA in the area of estate, inheritance and gift taxes from December 21, 2001. The double taxation agreement provides for special rules for the taxation of German-American estates.
Art. 4 of the DTA regulates where a person has their tax residence. If the person had a permanent place of residence in both contracting states or in neither of the contracting states, their place of residence is deemed to be in the contracting state with which they had close personal and economic ties, the so-called “center of vital interests”. This lies in the contracting state with which the significantly closer personal and also significant economic relations existed. When moving to another country, there is a special rule for ten years. The US tax exemption is granted proportionally. Otherwise, double taxation is avoided through crediting.
Individual evidence
- ↑ a b c Quoted from Jan-Hendrik Frank: Estate tax and inheritance tax in the USA .
- ↑ www.irs.gov Annual Inflation Adjustments for 2013 English; accessed on February 27, 2014
- ↑ IRS: Some Nonresidents with US Assets Must File Estate Tax Returns
- ↑ a b www.irs.gov Instructions for Form 706 PDF, 632kB, page 3 or 5, English; accessed on February 27, 2014
- ↑ http://www.mcguirewoods.com/news-resources/publications/taxation/state_death_tax_chart.pdf
- ^ Estate Tax The New York State Department of Taxation and Finance; Overview of New York Estate Tax Laws Overview of New York State tax law
- ↑ Double taxation agreement of December 21, 2001 ( Memento of the original of January 2, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ Quoted from Jan-Hendrik Frank: The taxation of German-American inheritance according to the German-American double taxation agreement
