What taxes do I have to pay on an inheritance from N.Y. resident?

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Q. What taxes do I have from an inheritance from my aunt who was a New York State resident if I live in New Jersey?
— Niece

A. Inheritance taxes are different from state to state.

New Jersey has an inheritance tax that taxes transfers from someone who dies as a resident of New Jersey, or as a non-resident owning tangible personal property or real property situated in New Jersey, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

There are taxes due on inheritances to anyone other than a Class A beneficiary, which includes a spouse, domestic partner, descendant, grandparent and stepchild, she said.

Therefore, as an example, a niece would be taxed if she received a New Jersey home from her aunt who died as a resident of New York, Romania said.

New York does not have an inheritance tax, so there wouldn’t be an inheritance tax owed on property owned in New York.

But New York does have an estate tax.

“It taxes the estates of individuals dying as New York residents in 2020 if their taxable estates exceed $5.85 million,” Romania said. “A federal estate tax may also be incurred on estates that exceed the federal exemption, presently $11.85 million for decedents dying in 2020.”

Romania said if your aunt left a will, the will may provide for how estate and/or inheritance taxes are paid and allocated among the various beneficiaries. Otherwise, each beneficiary pays his or her pro rata share.

“Finally, depending on the type of asset you inherit, you may be responsible for income taxes,” she said. “For example, if you inherit a retirement account, income tax may be owed on distributions made from the account to you.”

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This story was originally published on Sept. 9, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.