Which state's inheritance tax laws do we follow?

2 answers | Last updated: Jun 06, 2017
Dstuder asked...

My mother-in-law passed away this summer in Ohio. Her estate was less than $100,000 and each sibling received an inheritance check of $26,700.

We live in Tennessee, do I have to show this as income on my 2009 income tax and pay taxes on it? Ohio doesn't have an inheritance tax, only an estate tax on estates over $300,000+, but Tennessee has an inheritance tax.

What state do I follow and do I have to claim it as income?

Expert Answers

You do not have to pay state inheritance tax or state income tax. Your mother lived in Ohio, so that state determines whether any inheritance tax must be paid. Under Ohio law, her estate was not subject to inheritance tax. Tennessee law, that state of your residence, has no application to your mother's estate.

You do not have to pay income tax (federal or state) on your inheritance. Inheritances are not subject to income tax. [Of course, there are exceptions, such as money left in an IRA that was not taxed before.] You have inherited the money free and clear.

Community Answers

Geo2015 answered...

Yep, as the Expert explains, we all abide by the laws of the state the estate is based in, or that probate is filed in… Only problem I have with that is, well, it’s fine for those who live in a state that has low or no estate tax… but what about the rest if us that reside in states that simply crush us with estate and inheritance taxes!

Dstuder lives in Ohio, so that's nice for Dstuder. But so many heirs live in states that just decimate our inheritance assets or inherited real estate with heavy taxes. And of course, so many people with middle class families receive low or at best modest inheritances… so insult to injury – it’s bad enough so many of us inherit so little… but then state taxes come into it, lowering our inheritance even more. $26,700, which Dstuder’s co-heirs are inheriting, is sadly enough similar to what many heirs inherit… $25,000, $30,000, maybe $50,000 – or the $100,000 to $150,000 range if we’re really lucky, and don’t have many heirs, or no heirs, to share it with! It really does look more and more that only the 1%, and possibly a small percentage of the upper middle class set, inherit the high 6-figure and 7-figure inheritances these days.

In fact so many middle class heirs get so disappointed and gloomy about their low inheritance, they frequently begin looking into inheritance cash advance funds – probate loans, estate loans or estate advances, inheritance loans, large or small inheritance advances or inheritance advance loans, or even probate real estate loans right away after a decedent has died — after looking into inheritance advance rates, or inheritance loan fees… often, for good measure, along with submitting inheritance cash advance, probate loan, or probate cash advance applications to several various online probate loan and trust inheritance loan companies that strictly provide loans on inheritance, inheritance loan advances, probate cash advance funds, inheritance loans in advance, and loans against inheritance, from well known inheritance loan companies like www.heiradvance.com or www.inheritancenow.com, or maybe the good old www.inheritanceadvance.com firm. Established inheritance loans and probate loans specialists that provide heirs and beneficiaries with super fast estate loan or probate loan or inheritance advance services – exclusively for probate heirs and trust fund beneficiaries.

Disappointed, depressed heirs like that – frequently with all around money problems and cash flow issues – may be upset with the low-ish inheritance that they’re waiting for, but there’s nothing like some fast probate cash, or a nice fat inheritance cash advance, probate loan windfall, to make things look more cheerful the next day for the next 6 month, 12 months.