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Old 05-12-2011, 10:48 AM
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PA Inheritance, MA resident

A distant relative's estate was dealt with in PA. All Fed and PA state taxes were paid and the proceeds were divided. I received a portion of those proceeds, but I live in MA and would like to understand what additional MA and Federal taxes I need to pay on this money. Online resources seem to talk extensively about dealing with the estate taxes, but no mention of individual taxes on the proceeds. Does that mean there are not any additional to be paid?

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Old 05-13-2011, 10:18 AM
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“A distant relative's estate was dealt with in PA. All Fed and PA state taxes were paid and the proceeds were divided. I received a portion of those proceeds, but I live in MA and would like to understand what additional MA and Federal taxes I need to pay on this money. Online resources seem to talk extensively about dealing with the estate taxes, but no mention of individual taxes on the proceeds. Does that mean there are not any additional to be paid?”--->As long as your portion of those proceeds is given to you as a gift( I guess you are not one ofthe beneficiaries of the estate), then it is not subject to federal and MA state tax.


Last edited by Wnhough : 05-13-2011 at 10:50 AM.


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Old 05-13-2011, 01:59 PM
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Well, yes my wife was a beneficiary. The amount is about $25K. I had a windfall last year so I'll be paying less tax this year and I've got to be careful about estimated taxes. So I'd like to understand if I need to pay estimated taxes on this amount. As I said the estate paid all the PA and Fed taxes already.

thanks



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Old 05-13-2011, 05:30 PM
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“Well, yes my wife was a beneficiary.”---> In 2010, the estate tax is completely repealed, and in 2011 the estate tax law returns using 2001 rules. So, heirs of decedents who die during 2010 will have the choice between using the modified carryover basis rules or applying the retroactively reinstated estate tax. Since your spouse paid both Fed and PA state taxes on her portion of the taxable estate, as a full year resident of MA, your spouse can claim PA tax credit paid on the taxable estate to PA on her MA state return as long as the tax rate in MA is higher than that in PA. For example, assume that your spouse paid LTCG tax to PA on the taxable estate asset, then she can claim PA tax credit on her MA return in lieu of paying same LTCG tax to MA ALSO.
“ The amount is about $25K. I had a windfall last year so I'll be paying less tax this year and I've got to be careful about estimated taxes. So I'd like to understand if I need to pay estimated taxes on this amount. As I said the estate paid all the PA and Fed taxes already.”--->No; as said above since your spouse( also as you said) paid all the PA and Fed taxes already, you don’t need to pay (quarterly) estimated taxes to both Fed. Govt. and MA state on the amount, $25,000. You can claim PA tax credit on your MA state return.



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Old 05-16-2011, 11:50 AM
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Great, thanks!



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