Q: Hello, I will be inheriting $90,000. and live in Montgomery County Maryland will I be paying any MD or Federal taxes?
A: If the sum total of the Estate is only $90,000, then you are well under state and federal thresholds for estate tax. There are several other fees you may have to handle - probate fees, capital gains, income tax, all depending on the nature of the assets in the estate. Please consult a qualified CPA/attorney to assess your potential liability.
** Please note this is not to be considered legal or tax advice, and creates no attorney-client relationship. **
A: There are two types of taxes: estate taxes and inheritance taxes. Heirs do not pay estate taxes at either the federal or state level out of their distributions; rather, those taxes are paid by the estate based on he gross value of all assets. The first $11.85 million of estate assets is exempt from federal taxation, and the first $5 million is exempt from Maryland taxation. Even if taxes are owed in such a large estate, a specific bequest like $90,000 is generally not reduced by a proportionate share of the estate taxes. There is no federal inheritance tax, but some heirs pay a Maryland state inheritance tax. That is deducted from your inheritance before it is distributed to you, so you do not actually pay it directly, but your distribution is reduced to pay it. However, immediate family members of the deceased (children, siblings, spouse, parents) and direct lineal heirs in both directions, e.g., grandchildren and grandparents, etc., are exempt from having to pay inheritance taxes. The inheritance tax in Maryland is 10% of the distribution owed to you, so if you are not exempt based on your relationship to the deceased, then your payment will be reduced by $9,000.
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