How do I avoid inheritance tax in PA?

7 Simple Ways to Minimize the Pennsylvania Inheritance Tax

  1. Set up joint accounts with the people you wish to benefit.
  2. Gift your assets to your children.
  3. Buy extra life insurance.
  4. Utilize life insurance to give money to beneficiaries who are taxed at the highest tax rates.
  5. Buy real estate outside of Pennsylvania.

Does a surviving spouse need to file a PA inheritance tax return?

A surviving spouse does not owe Pennsylvania inheritance tax, but other inheritors might have to pay. If you are a Pennsylvania resident, or if you own real estate or tangible property located in Pennsylvania, the people who inherit your property might have to pay a tax on the amount that they inherit.

What is the PA inheritance tax waiver?

Property owned jointly between spouses is exempt from inheritance tax. Effective for estates of decedents dying after June 30, 2012, certain farm land and other agricultural property are exempt from Pennsylvania inheritance tax, provided the property is transferred to eligible recipients.

Does executor pay inheritance tax?

If there’s a will, it’s usually the executor of the will who arranges to pay the Inheritance Tax. If there isn’t a will, it’s the administrator of the estate who does this. IHT can be paid from funds within the estate, or from money raised from the sale of the assets.

Do you have to pay income tax on inheritance in PA?

The amount of an inheritance is not taxable on a PA-40 Personal Income Tax return. However, the amount is added to the income when qualifying for Tax Forgiveness. If you review Schedule SP, you will see that the value of an inheritance is one of the items that is added to taxable income to calculate eligibility income.

Is there inheritance tax in PA?

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 government entities that are exempt from tax).