Learning how to avoid the PA inheritance tax is as easy as following these simple steps. The Pennsylvania inheritance tax can erode into the value to your will really fast. You need to know how to minimize the PA inheritance tax not only for yourself, but also for your loved ones whom you are passing on your properties to. While there has been talks that the Pennsylvania state legislature is negotiating a deal to reduce or eliminate the PA inheritance tax, with the reduced budget and increasing spending, it is unlikely the Pennsylvania inheritance tax will be eliminated any time soon. This article will show you tips and tricks that will help you and your loved ones avoid the PA inheritance tax.
- Divide your money early. Some people may be uncomfortable with the idea of dividing their wealth while they are still alive, but it is the best way to avoid the PA inheritance tax. You can slowly, and in small amounts, give your wealth to your spouse and children over time, instead of a bulk of money at the end. This is by far the most effective strategy in avoiding a large inheritance tax.
- Select the right person to leave your property to. Not everyone is equal under the PA inheritance tax. For example, passing your property to your spouse will not result in any inheritance tax, while passing your property to a non-family member will result in a fifteen percent inheritance tax. You need to weigh in the tax benefits when writing your will.
- Find all the tax exemptions. You can get a lot of deductions from the PA inheritance tax. For example, you can deduct attorney fees, probate fees and professional fees from the amount of your inheritance. By using these deductions, you can reduce your tax bill.
- Use the tax discounts. Yes, you heard it right. Pennsylvania will offer you an inheritance tax discount of five percent if you are paying your tax bill within 90 days of receiving your inheritance. While the number may be small, it can save you hundreds, if not thousands, of dollars.