Pennsylvania decedents, regardless of where their beneficiaries reside, may be required to file a Pennsylvania Inheritance Tax Return (REV-1500). The inheritance tax return is a separate state return from estate, personal, and business tax returns.
The PA Department of Revenue defines an inheritance tax as “a tax on the right of succession or privilege of receiving property at a death, and it is imposed upon the transfer of taxable property”. The PA inheritance tax return is a tax to the person receiving property from a death.
The inheritance tax return includes the value of the decedent’s assets, less certain allowable deductions. Deductions permitted include funeral expenses, administrative costs, and debts owed by the decedent at the time of death. A return is required of any decedent residing in PA with assets which may be subject to Inheritance Tax or a non-resident decedent who owns tangible property in the state of PA. Examples of assets may include home or other real estate, automobile, bank/investment accounts.
Filing date requirements:
- No later than nine months from decedent’s death
- An extension request is permitted. The request must be before the return due date. In addition, a granted extension does not delay any possible tax liability due and interest will be assessed on any tax due with an extended tax return.
The beneficiary type determines the inheritance tax rate. Below includes the tax rates and beneficiary types which are spousal and minor child, lineal, sibling, collateral, and charitable bequests. Several examples are listed describing each beneficiary type:
|PA REV-1500 Tax Rates|
|Tax Rate||Beneficiary Type|
|0%||Spousal & Minor Child|
|4.5%||Lineal (Grandfather, grandmother, father, mother, children)|
|12%||Sibling (brothers, half-brothers, sisters, half-sisters)|
|15%||Collateral (All other beneficiaries, including transfers between stepsiblings, pets and organizations not classified as charity)|
|Exempt||Charitable Bequests (Exempt institutions and government entities)|
Mother passes on 12/1/2019 leaving home to one child (spouse previously deceased). The home value at date of death is $150,000.00. The only expense is a funeral expense at $15,000.00.
The inheritance tax rate is lineal at 4.5% to the daughter. The inheritance tax liability is $6,075.00 due by September 1, 2020.
Tax situations are rarely a simplified example. Deluzio & Company, LLP is a diverse and full-service accounting firm qualified to handle the complex situations in life. We are ready, willing, and fully capable to handle all accounting circumstances. Please contact us today.