Under the Inheritance Tax law, the account was jointly owned because you and your mother had equal access to the account. Therefore, in this example, the survivor is taxed on one-half of the amount in the account.
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Inheritance Tax is imposed on the value of a decedent’s estate transferred to beneficiaries by Will or intestacy. It is calculated at a percentage of the value of the assets transferred, which is determined by the relationship of the heir to the decedent and the decedent’s date of death.
For more information, view the PA Inheritance Tax Return Filing Instructions (PDF).
The tax rate for Pennsylvania Inheritance Tax is 4.5% for transfers to direct descendants (lineal heirs), 12% for transfers to siblings and 15% for transfers to other heirs (except charitable organizations, exempt institutions and governmental entities which are exempt from tax). Property owned jointly between husband and wife is exempt from Inheritance Tax. Since 1995, property inherited by a surviving spouse, or from a child aged 21 or younger by a parent, is taxed at a rate of 0%.
Lineal heirs are grandfathers, grandmothers, fathers, mothers and their children. "Children" included are: natural children (whether or not they have been adopted by others), adopted children and step-children.
Lineal descendants include all children of the natural parents and their descendants (whether or not they have been adopted by others), adopted descendants and their descendants and step-descendants.
The tax is due at the date of death and becomes delinquent 9 months after the date of death. There is a discount of 5% of the tax paid or the tax due, whichever is less, when the payment is made within 3 months of the date of death.
All real property and all tangible personal property of a resident decedent, located in Pennsylvania at the time of the decedent’s death is taxable, including but not limited to:
All intangible property of a resident decedent, including stocks, bonds, bank accounts, loans receivable, etc., is also taxable regardless of where it is located at the time of the decedent’s death.
In the case of a nonresident decedent, all real property and tangible personal property located in Pennsylvania at the time of the decedent’s death is taxable. Intangible personal property of a nonresident decedent is not taxable.
Jointly-owned property with right of survivorship, except between husband and wife, including but not limited to real estate, securities, bank accounts, etc., is taxable to the extent of the decedent’s fractional interest in the joint property (calculated by dividing the value of the joint property by the number of joint owners at the time of the decedent’s death). Joint property is taxable even though the decedent’s name was added as a matter of convenience.
Further, if the decedent created the joint interest in the property within a year of his/her death, the full value of the property is taxable in the decedent’s estate.
Yes. Unsatisfied liabilities incurred by the decedent prior to his/her death are deductible against his/her taxable estate. In addition to debts incurred by the decedent or the estate, the cost of administration of the estate, attorney fees, and fiduciary fees incurred to administer the estate, funeral and burial expenses including the cost of a burial lot, tombstone or grave marker, and other related burial expenses, are deductible.
Previously, transfers to surviving spouses were taxed at a rate of 6%, commonly known as the "widows’ tax". Since January 1, 1995, the tax rate for transfers to a surviving spouse is 0%. A Pennsylvania widow or widower pays no tax on assets inherited from a deceased spouse.
The family exemption is a right given to specific individuals to retain or claim certain types of decedent’s property in accordance with Section 3121 of the Probate, Estate and Fiduciaries Code. For decedents who died after January 29, 1995, the family exemption is $3,500.
The family exemption may be claimed by a spouse of a decedent who was a resident of Pennsylvania. If there is no spouse, or if the spouse has forfeited his/her rights, then any child of the decedent, who is a member of the same household as the decedent may claim the exemption.
In the event there is no spouse or child, the exemption may be claimed by a parent or parents who are members of the same household as the decedent. The family exemption is allowable against assets which are passed on with or without a will.
No, the amount of an inheritance is not taxable for PA Personal Income Tax purposes. However, if you qualify for Tax Forgiveness on your income tax return, you will need to include the value of your inheritance as income on PA Schedule SP.
IRA’s are not subject to Inheritance Tax when the decedent is under the age of 59 ½ at the time of death. For 401K’s, the same provision applies unless the owner of the plan could have closed out the plan during his/her lifetime. In most plans, the right does not accrue until the "normal retirement age" is reached, which is usually 62 or 65 years of age.
Inheritance Tax returns are due 9 months after a person’s death. The responsible party is the person named in the will as executor, or if the person dies without a will, the individual who is approved as administrator by the Register of Wills after a petition is filed. If no executor or administrator is named, and property or transfers exist, then the person receiving the property is required to file a return and pay the tax.
If the decedent was a resident of the Commonwealth of Pennsylvania at the time of his/her death, the Inheritance Tax return is to be filed in duplicate with the Register of Wills in the county where the decedent was a resident at the time of his/her death.
If the decedent was a nonresident of Pennsylvania, the Inheritance Tax return is to be filed in duplicate with the Register of Wills that issues Letters Testamentary or Letters of Administration, if any. Otherwise, the Inheritance Tax return is to be filed with the PA Department of Revenue, Bureau of Individual Taxes.
All information in these FAQs is to inform/is intended to be of assistance by providing basic information relating to Pennsylvania Inheritance Tax, and not to advise. It is based upon Pennsylvania law. All statements are general, and individual facts in a given case may alter their application or involve other laws not referred to here.
All questions regarding your Inheritance Tax Return should be directed to the PA Department of Revenue. The Register of Wills Office is a filing office for your tax return and cannot give advice or assistance in completing your return. The PA Department of Revenue is striving to serve you better by offering a variety of ways to get tax information.
For additional information, contact:Inheritance Tax DivisionPA Department of RevenueBureau of Individual TaxesDepartment 280601Harrisburg, PA 17128-0601Office Phone: 717-787-8327Fax: 717-772-0412PA Department of Revenue WebsiteEmail the PA Department of Revenue