If I receive an inheritance, do I have to pay taxes on it in PA?

Often, when people receive inheritances in Pennsylvania, they fail to realize that they may have to pay taxes on the amount they received. Like many other states, the inheritance tax rate is determined on the relationship that you, the beneficiary, had with the decedent.

  • If you are the decedent’s surviving spouse, you will be exempt from paying any inheritance taxes. Any joint property owned by both spouses is also exempt from taxes. This is also true if you are the surviving parent of a child who was 21 or younger at the time of his or her passing.
  • If you are a direct descendant or a lineal heir of the decedent, you will be required to pay 4.5 percent of the inheritance in taxes.
  • If you are a sibling of the decedent, you will pay an inheritance tax of 12 percent.
  • All other heirs are subject to a 15 percent tax on inheritance.

It is also important to note that charitable organizations, certain institutions, and government entities are exempt from inheritance tax is they are named as a beneficiary.

When are inheritance taxes due?

The state of Pennsylvania requires that you must pay any inheritance taxes within 9 months of the date that the decedent passed away. Any payments after that are considered delinquent. Additionally, if you pay your inheritance tax within three months of the decedent’s death, you are eligible for a 5 percent discount on the taxes.

Also be aware that there are no federal inheritance taxes that need to be taken into consideration during this time.

If you have questions about inheritance taxes in Pennsylvania or need assistance planning your estate to ensure the greatest tax benefits for your beneficiaries, contact our firm today.

Friedman Schuman is an experienced and dedicated legal resource for clients throughout Pennsylvania. We proudly serve clients facing a wide range of legal matters. If you require the services of an effective attorney, please contact Friedman Schuman today to schedule a consultation.