What is the difference between Estate Tax and Inheiritance Tax?
An inheritance tax is a tax imposed on the people (beneficiaries) who receive property from the deceased. The tax is calculated separately for each beneficiary, and each beneficiary is responsible for paying his or her own inheritance taxes. Those states that have inheritance taxes frequently tax spouses and children of the deceased at lower rates than other heirs. An estate tax is a tax imposed on the deceased’s estate as a whole. The executor fills out a single estate tax return and pays the tax out of the estate’s funds. The heirs will only be held liable for the tax if the executor fails to pay it. The federal government imposes an estate tax on all citizens and residents of the United States. It imposes no inheritance tax. Every estate gets an estate tax deduction for all property received by the deceased’s spouse, as well as a $2 million standard exemption for all other property. Thus, many middle class Americans will owe no federal estate tax.
