Estate Tax or Inheritance Tax?

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About This Quiz

Death and taxes are the two things you can't avoid. Even worse, they'll tax you when you're dead! Take our quiz to test your knowledge of the differences between the two kinds of death taxes: estate tax and inheritance tax.

Is the estate tax a federal tax, a state tax -- or can it be both?

There is a federal estate tax that covers all U.S. estates, but 18 states collect their own estate taxes on top of the federal tax.

True or False: The federal inheritance tax rate is 25 percent.

Trick question! There is no federal inheritance tax. Inheritance taxes are levied exclusively by individual states.

How many U.S. states charge an inheritance tax?

Only seven states charge an inheritance tax, so consider yourself lucky if you don't live in one of them.

Which of the following states does NOT charge both a state inheritance tax and a state estate tax on its residents?

Yup, you'll get slammed from all sides if you live (or more accurately, die) in Maryland or New Jersey.

True or False: Both the inheritance tax and the estate tax are paid by the beneficiaries of the estate.

Only the inheritance tax is paid by the beneficiaries of the assets. The estate tax is paid by the estate itself through the executor of the estate.

Under 2012 tax law, what is the highest inheritance tax rate levied by any state government?

Indiana wins the prize with the highest marginal inheritance tax rate of 20 percent on the largest estates.

Under 2012 tax law, what is the flat federal estate tax rate?

After the estate tax was repealed for a year in 2010, Congress passed a 35 percent estate tax rate for 2011 and 2012.

Which of the following estates would be subject to the estate tax in 2012?

The exclusion threshold for the estate tax is currently $5 million, meaning that all estates worth less that $5 million don't owe a cent in estate tax.

What is the lowest exclusion threshold, or exemption from paying a state inheritance tax?

In both Iowa and Pennsylvania, there is no exclusion threshold from paying inheritance tax.

Which of the following "death taxes" charges different tax rates to blood relatives of the deceased and non-related beneficiaries?

Federal estate tax charges a flat rate on all estates that exceed the $5 million threshold. Most states, however, charge different inheritance tax rates for family and non-family beneficiaries.

In Pennsylvania, direct descendants owe 4.5 percent of their inheritance to the state. What percentage do non-related beneficiaries pay?

Non-family beneficiaries — that aren't tax-exempt charitable institutions — pay 15 percent of the inheritance. Even siblings have to pay 12 percent.

True or False: Assets that are left to a surviving spouse are exempt from both federal estate tax and state inheritance taxes.

Yes, this one is true. If you leave money or other assets to your spouse, all of those assets are exempt from estate or inheritance taxes.

Which of the following items CANNOT be deducted from the gross value of an estate to calculate the taxable value?

In fact, life insurance benefits are counted toward the value of an estate, not subtracted from it.

How many deaths in 2011 will result in the payment of estate taxes?

According to estimates from the Tax Policy Center, only 3,300 estates will owe estate tax under current tax law.

If a resident of Tennessee dies and leaves an estate worth $2 million, will the estate and its beneficiaries owe federal estate tax, state inheritance tax, both, or neither?

Since the exemption for federal estate tax is $5 million and the Tennessee state inheritance tax exemption is $1 million, the beneficiaries will likely have to pay the state some money.

The federal estate tax rate is 35 percent. Therefore, how much does a $6 million estate owe in estate taxes in 2011?

According to current tax law, the estate pays taxes on the value of the estate exceeding $5 million, which is $1 million. 35 percent of $1 million is $350,000.

What percentage of all federal estate taxes is paid by the top 0.1 percent of income earners?

Yes, a tenth of a percent of Americans supply over half of the total estate tax revenue.

What percentage of all federal estate taxes is paid by income earners in the 0 through 90th percentiles?

Do you need further proof that the estate tax exclusively taxes the rich? The "lower" 90 percent of income earners contribute less than 2 percent of total estate tax receipts.

What percentage of all federal tax revenue is paid by the federal estate tax?

In 2011, federal estate taxes are estimated to bring in $10 billion to the government, which is only 1 percent of total tax revenue.

Federal estate taxes were temporarily repealed in 2010. Which of the following states did NOT repeal its state estate tax in both 2011 and 2012?

Kansas and Oklahoma took their cue from the feds and decided to kill state estate taxes from 2010 through 2012.

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