Business owners take note. The self assessment deadline is fast approaching and if you haven’t filed by midnight on 31 January expect hefty fines from HMRC. Although many can take it in their stride, for the uninitiated, completing a self assessment can be a daunting affair – especially if you don’t have a head for figures.
Do a bit of research and approach your personal tax return sensibly, though (and, of course, follow our simple tips below), and you’ll have it filed in no time.
Give yourself time!
Your self assessment isn’t something you can just sit down and do in one evening. If it’s your first time, you’ll have to wait for two separate pieces of information to arrive in the post from HMRC (your Unique Taxpayer Reference number, used to identify you, and your HMRC Online Services PIN number, which gives you access to the online filing system).
Not only that, but you’ll need your previous financial years’ bank and credit card statements. Banks often make procuring these records needlessly complicated, so plan in advance to make sure you have everything you need.
Get organised
A large part of filing a self assessment is just that – filing. You need to organise all your financial records sensibly, ready for entry into HMRC’s online filing system.
Categorise your records by income and expenses, and separate out revenue streams. For example, you may receive money directly through your business, but also own a rental property that nets you a few hundred quid every month. These need to be recorded separately.
Don’t rely on HMRC’s hotline
Although HMRC Online Services is full of helpful hints and tips, its self assessment hotline becomes virtually inaccessible for the last few days of January, as disorganised individuals rush to complete their tax return at the last minute.
You may be able to get through if you persist, but HMRC’s call centres shouldn’t be relied upon around personal tax season.
If in doubt – consult an expert
Those with more complicated finances may well be better off engaging an accountant to complete their self assessment. Many firms offer a one-off personal tax service for about £75, which can prove a real lifesaver if you get stuck.
Remember, you have to pay your tax on the 31 January, too
If you leave your filing to the last minute only to find out you owe HMRC thousands, that’s bad news for you and your bank balance. Filing early will allow you to find out how much tax you owe beforehand, so you can plan appropriately.
Self assessments aren’t always bad news, though. If you’ve overpaid your taxes in the last financial year you’ll be in line for a refund from HMRC and filing early means you’ll be at the head of the queue when the taxman’s purse open.
Wednesday, January 25, 2017
Thursday, November 24, 2016
The Pros and Cons of Payday Loans
The Inside Scoop On Payday Loans – Are They a Good Choice?
Payday lenders seem to be on every corner in most major cities. This points to two key issues – a large segment of the population needs financial help from time to time, and there appear to be minimal options for those who need cash quickly but don’t want to visit a payday lender.
When seeking a source of quick cash, it is important to understand the basics of each specific loan type. Payday loans are generally the quickest source of cash, with money in hand in literally minutes. But what are the tradeoffs for this rapid turnaround time?
Payday lenders are just that – providers of loans that are designed to span the time gap between two paychecks. For those that need cash immediately and cannot wait until their next paycheck, a payday lender provides a financial bridge that gets the borrower out of immediate financial trouble. It is important to note, though, that the loan must be paid back upon receiving a subsequent paycheck – so it is vital that the borrower plans for the repayment money to come out of their account during their next pay period.
Payday loans are certainly a method of accessing cash quickly, but that rapid access comes at a cost. The interest rates on payday loans can quickly become predatory, with “several hundred percent” annual interest rate loans not uncommon among payday lenders. A payday lender who charges $50 in interest on a $500 advance for two weeks is effectively charging a 260% interest rate. For many, this is simply too costly a way to borrow money.
Fees are another issue to consider. Though the loan is only a short-term fix, it is important to factor in the upfront fees that a payday lender may charge. Fees like administrative fees, credit report fees, processing charges, and application fees can quickly add up and reduce the overall benefit of taking out a payday loan. These fees should be clearly communicated prior to signing for the payday loan.
One final consideration to make when investigating a payday loan is the amount of cash the borrower needs. Payday loans are fairly low dollar loans – typically limited by the amount of money the borrower makes on a per-paycheck basis. Other loans types on the market today might make more sense for the borrower who needs to access additional funds or who needs a longer term loan.
Weighing the Pros and Cons of a Payday Loan
Payday loans usually offer a quick and simple application process and access to cash in minutes. They are designed to accommodate short-term cash borrowing needs only, and don’t commit the borrower to a loan for more than a few weeks.
Drawbacks to payday loans revolve around lack of access to significant amounts of money, extremely high interest rates, the potential for upfront fees that reduce the benefit of the loan, and the potential for getting trapped into the “payday loan cycle,” in which borrowers need to take out additional loans to payback previous loans.
Payday loans have their place, but for the borrower who values quick access to significant amounts of cash at reasonable interest rates, it may make sense to investigate other loan types. Some borrowers have found that vehicle title loans or title pawns provide quick access to cash, reasonable interest rates and fees, no credit score requirements, and more favorable repayment terms than payday loans.
Other loan that is quite interesting would be the Costco car loan.
Payday lenders seem to be on every corner in most major cities. This points to two key issues – a large segment of the population needs financial help from time to time, and there appear to be minimal options for those who need cash quickly but don’t want to visit a payday lender.
Image Source: CompGrammer
When seeking a source of quick cash, it is important to understand the basics of each specific loan type. Payday loans are generally the quickest source of cash, with money in hand in literally minutes. But what are the tradeoffs for this rapid turnaround time?
Payday lenders are just that – providers of loans that are designed to span the time gap between two paychecks. For those that need cash immediately and cannot wait until their next paycheck, a payday lender provides a financial bridge that gets the borrower out of immediate financial trouble. It is important to note, though, that the loan must be paid back upon receiving a subsequent paycheck – so it is vital that the borrower plans for the repayment money to come out of their account during their next pay period.
Payday loans are certainly a method of accessing cash quickly, but that rapid access comes at a cost. The interest rates on payday loans can quickly become predatory, with “several hundred percent” annual interest rate loans not uncommon among payday lenders. A payday lender who charges $50 in interest on a $500 advance for two weeks is effectively charging a 260% interest rate. For many, this is simply too costly a way to borrow money.
Fees are another issue to consider. Though the loan is only a short-term fix, it is important to factor in the upfront fees that a payday lender may charge. Fees like administrative fees, credit report fees, processing charges, and application fees can quickly add up and reduce the overall benefit of taking out a payday loan. These fees should be clearly communicated prior to signing for the payday loan.
One final consideration to make when investigating a payday loan is the amount of cash the borrower needs. Payday loans are fairly low dollar loans – typically limited by the amount of money the borrower makes on a per-paycheck basis. Other loans types on the market today might make more sense for the borrower who needs to access additional funds or who needs a longer term loan.
Weighing the Pros and Cons of a Payday Loan
Payday loans usually offer a quick and simple application process and access to cash in minutes. They are designed to accommodate short-term cash borrowing needs only, and don’t commit the borrower to a loan for more than a few weeks.
Drawbacks to payday loans revolve around lack of access to significant amounts of money, extremely high interest rates, the potential for upfront fees that reduce the benefit of the loan, and the potential for getting trapped into the “payday loan cycle,” in which borrowers need to take out additional loans to payback previous loans.
Payday loans have their place, but for the borrower who values quick access to significant amounts of cash at reasonable interest rates, it may make sense to investigate other loan types. Some borrowers have found that vehicle title loans or title pawns provide quick access to cash, reasonable interest rates and fees, no credit score requirements, and more favorable repayment terms than payday loans.
Other loan that is quite interesting would be the Costco car loan.
Tuesday, May 31, 2016
Finding Real Estate Bargains
The housing boom caused an amazing burst of beautiful homes to be built, buyers let into the market with lending standards based on imaginary incomes and adjustable rate ticking time bomb mortgages; while this was a story that played out across the country, it happened to hit Central Florida in spectacular fashion. There are entire subdivisions with bank foreclosure signs that have popped up like dandelions, as more homeowners, having come to the conclusion that the loan on their home is worth more than the home is worth, are walking away.
For real estate investors, or people looking to get into the housing market, there may never be a better time to get a home in the Orlando area. Houses are large, and on well situated lots, because during the crazy years leading up to many years to come, everyone was obsessed with ‘bigger and better’. Deals can be had, and they can be had for some interesting terms.
All that said, while the opportunity is golden if you’ve got cash to spend (or are one of the diminished handful that can get credit sufficient to cover a mortgage), there are extra hurdles to jump through to buy a home. There are enough extra hassles in buying a distressed property that you may want to have an expert along for the ride; this can make the difference between getting a stunning deal and a merely good one. Distressed home sales run through a number of steps – the earliest one is called a short sale. In a nutshell, a homeowner who’s behind on his mortgage, and unable to find a buyer who will pay what’s left on the debt to take over the house will try to act as the intermediary between a prospective buyer willing to pay less, and a bank which may be willing to take less rather than go through the process of a formal foreclosure. This type of sale starts to show up when housing prices fall or merely stagnate.
The win-win-win scenario in a short sale is that the seller doesn’t torpedo their credit from walking away from the house, the bank loses less money than if they foreclosed on the house, and the buyer gets a house for a significant discount. In a number of Orlando neighborhoods, houses in a short-sale situation can be had for as much as 40% 50% or 60% off of their present appraised value.
What short sales aren’t are fast. Each party in the three-way transaction has their own interests to watch out for, and none of those interests are conducive to a fast transaction. The bank needs to assess how much of a loss they’re willing to take to cut out on the transaction, the buyer wants to push the price down as far as he can, and the seller wants to keep the price as high as possible to preserve his credit rating. Expect this to take four to nine months to resolve, and longer if the property has multiple mortgages.
So, as a home buyer, expect to exercise patience. Because of the collapse of the housing sector, even assessing proper values on a home can be tricky. The largest discounts on short sales are for very large houses; houses in the $300,000 or less range (and many condominiums) are holding their value well. Also, as with all things dealing with real estate, location and neighborhoods have an impact on top of this.
Another thing to consider, when buying a distressed property, is how much you’ll have to spend to get it livable, or ready for resale. While some people made a lot of money flipping houses during the real estate bubble, this is a different market. If you’re buying a house as an investment property, you’re better off holding the long view on its value. Finding a new buyer in today’s market is a challenge to say the least.
Still, Central Florida remains a destination of choice, and for people who are buying a home to retire in, or a vacation home, distressed properties are a window of opportunity at the moment. In order to buy a home, you will most probably need a mortgage to secure it. There are many mortgage lenders on the market and one of the leading one would be the Churchill mortgage. If you never heard of this lender, it is best for you to study the Churchill mortgage reviews first and figure out if any of the mortgages that offered by this lender is matching you.
For real estate investors, or people looking to get into the housing market, there may never be a better time to get a home in the Orlando area. Houses are large, and on well situated lots, because during the crazy years leading up to many years to come, everyone was obsessed with ‘bigger and better’. Deals can be had, and they can be had for some interesting terms.
All that said, while the opportunity is golden if you’ve got cash to spend (or are one of the diminished handful that can get credit sufficient to cover a mortgage), there are extra hurdles to jump through to buy a home. There are enough extra hassles in buying a distressed property that you may want to have an expert along for the ride; this can make the difference between getting a stunning deal and a merely good one. Distressed home sales run through a number of steps – the earliest one is called a short sale. In a nutshell, a homeowner who’s behind on his mortgage, and unable to find a buyer who will pay what’s left on the debt to take over the house will try to act as the intermediary between a prospective buyer willing to pay less, and a bank which may be willing to take less rather than go through the process of a formal foreclosure. This type of sale starts to show up when housing prices fall or merely stagnate.
The win-win-win scenario in a short sale is that the seller doesn’t torpedo their credit from walking away from the house, the bank loses less money than if they foreclosed on the house, and the buyer gets a house for a significant discount. In a number of Orlando neighborhoods, houses in a short-sale situation can be had for as much as 40% 50% or 60% off of their present appraised value.
What short sales aren’t are fast. Each party in the three-way transaction has their own interests to watch out for, and none of those interests are conducive to a fast transaction. The bank needs to assess how much of a loss they’re willing to take to cut out on the transaction, the buyer wants to push the price down as far as he can, and the seller wants to keep the price as high as possible to preserve his credit rating. Expect this to take four to nine months to resolve, and longer if the property has multiple mortgages.
So, as a home buyer, expect to exercise patience. Because of the collapse of the housing sector, even assessing proper values on a home can be tricky. The largest discounts on short sales are for very large houses; houses in the $300,000 or less range (and many condominiums) are holding their value well. Also, as with all things dealing with real estate, location and neighborhoods have an impact on top of this.
Another thing to consider, when buying a distressed property, is how much you’ll have to spend to get it livable, or ready for resale. While some people made a lot of money flipping houses during the real estate bubble, this is a different market. If you’re buying a house as an investment property, you’re better off holding the long view on its value. Finding a new buyer in today’s market is a challenge to say the least.
Still, Central Florida remains a destination of choice, and for people who are buying a home to retire in, or a vacation home, distressed properties are a window of opportunity at the moment. In order to buy a home, you will most probably need a mortgage to secure it. There are many mortgage lenders on the market and one of the leading one would be the Churchill mortgage. If you never heard of this lender, it is best for you to study the Churchill mortgage reviews first and figure out if any of the mortgages that offered by this lender is matching you.
Saturday, April 2, 2016
How to Refinance your Mortgage
Mortgage refinance is the transaction where you refinance your mortgage. You get rid of an old loan and replace it with a new one. You can save money in the process but there are some risks involved as well. In short, people refinance their mortgage to get a better deal. You can get a lower interest rate or a safer long term loan.
Step one is to compare your current loan with the new one. This type of finance does cost money. If you can get a better deal on paper, be sure to ask for costs that are associated with getting a refinance. No cost mortgage refinance does not exist. Be sure to read the fine prints on your current bad loan and identify any penalties for opting out of the mortgage early.
If you are planning on doing a refinance, make sure you are going to spend the extra money on important things, and not on materialistic items. It is not safe to spend money on things that you don’t necessarily need like a new ride or clothes. Think twice before engaging in this activity.
There are tons of available options for refinance in the market. It is wise to shop around. Try to conduct a cost assessment to help identify key benefits of your refinance. A financial professional can help guide you in the right direction.
Again, before signing any deals, please read all of the fine print. You much gov over the contract very carefully and not sign the deal in a hurry. There should be no pressure to sign. And remember, since you are the customer, you’ll have to know everything about your refinance before you are required to sign on the dotted line.
Don’t just blow your money if your refinance results in lower monthly payments. Always assume that the long-term goals are far more important. Don’t just think short-term. Material things can be left alone if you are considering saving money.
These are the ways on how you refinance your mortgage. Hopefully when you follow these steps you come out with the best deal in town.
However, in case your are needing an emergency loan, you may try to get from a personal loan from BSN in Malaysia if you happen to live in the region.
Step one is to compare your current loan with the new one. This type of finance does cost money. If you can get a better deal on paper, be sure to ask for costs that are associated with getting a refinance. No cost mortgage refinance does not exist. Be sure to read the fine prints on your current bad loan and identify any penalties for opting out of the mortgage early.
If you are planning on doing a refinance, make sure you are going to spend the extra money on important things, and not on materialistic items. It is not safe to spend money on things that you don’t necessarily need like a new ride or clothes. Think twice before engaging in this activity.
There are tons of available options for refinance in the market. It is wise to shop around. Try to conduct a cost assessment to help identify key benefits of your refinance. A financial professional can help guide you in the right direction.
Again, before signing any deals, please read all of the fine print. You much gov over the contract very carefully and not sign the deal in a hurry. There should be no pressure to sign. And remember, since you are the customer, you’ll have to know everything about your refinance before you are required to sign on the dotted line.
Don’t just blow your money if your refinance results in lower monthly payments. Always assume that the long-term goals are far more important. Don’t just think short-term. Material things can be left alone if you are considering saving money.
These are the ways on how you refinance your mortgage. Hopefully when you follow these steps you come out with the best deal in town.
However, in case your are needing an emergency loan, you may try to get from a personal loan from BSN in Malaysia if you happen to live in the region.
Thursday, February 25, 2016
Miles by Discover Card Review
Miles by Discover® Card is Perfect for Balance Transfers
The Miles by Discover® Card is a good choice of credit card for people who have existing credit card debt and looking at alternative financial and balance transfer options. The card itself is full of a wide range of different benefits and providing customers have an excellent credit rating they can start reaping the rewards of using this type of credit card immediately.
What Is Miles by Discover® Card?
The Miles by Discover® Card offers card holders a great rate of 0% on all balance transfers for the first 6 months and also 0% on all purchases too for the same 6 month period. With no annual fee, no fee if you go over your limit and no redemption fee, this card also provide card holders with the opportunity to earn up to 12,000 air miles every year for purchases that you make on your card.The air miles that customers can earn also have no blackout date and there is no limit on how much mileage rewards they can earn from using this card.
Miles by Discover® Card Options
As well as all the great rates and rewards that are on offer to Miles by Discover® Card holders, you can also personalise the design and style of your credit card so it can suit you personality exactly. You can now have a trendy looking and stylish credit card that is embossed with your favourite team logo or emblem, your favourite color or even one of your favourite pictures. There are hundreds of designs to choose from including arty designs, abstract images, landscapes, animals and even different lettering and fonts. Card holders can even choose what materials the card is made from so they can opt for a biodegradable card that is safer for the environment.How Does Miles by Discover® Card Help?
The Miles by Discover® Card offers a 0% introductory APR on all purchases and balance transfers for the first six months of use, with a regular rate of APR from anywhere between 10.99% and 16.99%, thereafter and depending on each customer’s credit rating and repayment history.Not only that but by using the card, customers will also be protected by Discover’s fraud prevention and online security systems that can help to keep customers money and personal information safe at all times.
If you are looking to move existing credit card onto another card via a balance transfer then the Miles by Discover® Card could be just for you.
If this is not the card that you are looking for, there is another card which is become more and more popular that is known as Sam's Club credit card. The card is released by Sam's Club and you can use it similar like other credit cards.
Tuesday, January 5, 2016
Debt Consolidation Concepts for Beginners
Everyone knows what debt consolidation is but there are also some who are not yet aware about the benefits of it. If you suffer from various financial problems like debts, loans, bills and other payments, then debt consolidation is just the right answer for you. All the money you owe and payments you need to pay off will be consolidated into one account. This single account will do all the work to repay all your creditors from different individuals and lending companies which you can’t seem to compensate in a limited time. Yet, you will only have to pay this debt consolidation account in a lesser interest rate and in a more manageable and secure way.
It’s like getting a huge loan to pay off all of your current balances and existing debts to make it easier for you to manage all your finances. But you can’t just apply debt consolidation programs that easily. It takes something that you own with a bigger value to guarantee your payments. It can be any of your current properties or assets but you can still have it back if you successfully pay this debt consolidation account in no time. What’s good about it is that there’s no need to run away from loan sharks and from your lenders to force you pay all your dues. This is the most secure and surest way to effectively make all your debts and other payments disappear.
It allows you to save more and pay less than the previous situation you had with your past debts and payments. This opportunity will help you manage all your finances and settle all your accounts to prevent you from future debt problems.
It is not easy to be buried with debts however, if there are options in which you can freely save yourself from this dangerous financial burden, then go for it. Through debt consolidation, you will have the chance to get your normal life back. When you started to break through from debts, be sure to avoid the same financial situation from coming back. You will never know how much you can still hang on with the same money problems as before but in case you needed help, debt consolidation will always save you from this terrible mess.
It’s like getting a huge loan to pay off all of your current balances and existing debts to make it easier for you to manage all your finances. But you can’t just apply debt consolidation programs that easily. It takes something that you own with a bigger value to guarantee your payments. It can be any of your current properties or assets but you can still have it back if you successfully pay this debt consolidation account in no time. What’s good about it is that there’s no need to run away from loan sharks and from your lenders to force you pay all your dues. This is the most secure and surest way to effectively make all your debts and other payments disappear.
It allows you to save more and pay less than the previous situation you had with your past debts and payments. This opportunity will help you manage all your finances and settle all your accounts to prevent you from future debt problems.
It is not easy to be buried with debts however, if there are options in which you can freely save yourself from this dangerous financial burden, then go for it. Through debt consolidation, you will have the chance to get your normal life back. When you started to break through from debts, be sure to avoid the same financial situation from coming back. You will never know how much you can still hang on with the same money problems as before but in case you needed help, debt consolidation will always save you from this terrible mess.
Wednesday, December 30, 2015
Estate and Inheritance Taxes in Indiana
What You May Owe If Someone Leaves You Something in the Hoosier State
Death, just as most things in life, is subject to taxes at both the federal and state level. The federal estate tax applies on the value of the assets a person leaves behind. For the year 2008, this tax applies on estates with a total value of $2 million or more. In 2009, only estates valued at $3.5 million or more will be subject to the federal estate tax, and in 2010 the tax is scheduled to be repealed, only to reappear in 2011 in its original form.
The estate tax is levied on the estate and is paid before any assets are distributed to the heirs. An inheritance tax is different, and is charged on the right to receive property by inheritance. An inheritance tax therefore falls on the heirs, or beneficiaries of an estate. The federal government does not charge an inheritance tax, but a few states do, and Indiana is one of them. Indiana also charges a state estate tax.
Who is subject to the Indiana state inheritance tax?
You could be subject to the Indiana state inheritance tax whether or not you are a resident of Indiana. The determining factor is whether the decedent was a resident of Indiana at the time of death, or held real or tangible property in Indiana, if not a resident of that state.
According to the Hamilton County Tax Assessor’s office, the Indiana inheritance tax applies to real estate, which includes land and everything permanently attached to the land, and tangible property located within Indiana that belonged to a decedent who was a resident of Indiana. It also applies to the decedent’s intangible property, regardless of where it is located, when the decedent was a resident of Indiana. Intangible property includes money, deposits, stocks and bonds, and any other types of property interests. The tax also applies to interests in real and tangible personal property located in Indiana if the decedent was not an Indiana resident.
Life insurance proceeds payable to a named beneficiary are not subject to the Indiana inheritance tax. Also excluded are real estate and tangible personal property located outside the state.
For decedents who were residents of Indiana, the inheritance taxes are determined by the Probate Court. For nonresidents who held assets in Indiana, the Inheritance Tax Division of the Indiana Department of Revenue determines the inheritance taxes.
Exemptions and rates
The Indiana Inheritance Tax is charged at progressive rates that increase the more distant your relationship from the decedent. And there are exemptions that decrease the more distant your relationship. In general, the closer your relationship to the decedent, the higher your exemption and the lower your tax rate will be.
A surviving spouse is 100% exempt from the Indiana inheritance tax. Charitable contributions are also eligible for a 100% exemption.
Lineal ancestors such as parents and grandparents, and lineal descendants including children, stepchildren and grandchildren are eligible for an exemption of $100,000 each. According to Monroe Bank, the progressive tax rates that apply on these ‘Class A’ beneficiaries range from 1% to 10% after the exemption.
Brothers and sisters, their lineal descendants such as nieces and nephews, and daughters-in-law and sons-in-law are eligible for an exemption of $500 each. The tax rates on these ‘Class B’ beneficiaries range from 7% to 15% after the exemption. Other persons, including aunts, uncles, cousins, nieces and nephews by marriage, friends, and corporations are eligible for an exemption of $100 each, with tax rates on these ‘Class C’ beneficiaries ranging from 10% to 20%.
Because of the 100% exemption, if a surviving spouse inherits the entire estate, an inheritance tax return does not have to be filed. For other heirs and beneficiaries, an inheritance tax return does not have to be filed if the amount each one inherits does not exceed the exemption amount. For example, if an estate with a value of less than $200,000 is left in equal parts to two children, no inheritance tax would be owed due to the $100,000 exemption each one of them has.
Indiana Estate Tax
The Indiana estate tax is imposed on the value of the decedent’s estate. Many states levy an estate tax for the exact amount of the credit for state death taxes that is allowed on the federal estate tax return. This is often called a “pick-up” tax, in the sense that the states pick up any slack left under the federal estate tax laws.
In Indiana, the estate tax is the difference between the Indiana portion of the credit allowed on the federal estate tax return and the amount of inheritance tax actually paid. If no federal estate tax return has to be filed, or if the amount of the credit for the state death tax on the federal estate tax return is less than the Indiana inheritance tax paid, there should be no Indiana estate tax owed.
How to file
The Hamilton County Tax Assessor’s office points out that according to Indiana law, each estate must file one Indiana Inheritance Tax Return on Form IH-6 on behalf of all the beneficiaries, when the exemptions do not exceed the total value of the estate.
The return is due one year after the decedent’s date of death, and must be filed with the probate court of the county in which the decedent resided. Form IH-6 can be obtained from the county Assessor’s Office, and is also available for download on the Indiana Department of Revenue website at www.in.gov/dor.
The inheritance tax is due 18 months after the date of death. If payment is made within 9 months from the date of death, there is a 5% discount. After 12 months, interest accrues at 10% per year on any unpaid portion.
Potential changes
There could be changes in the states’ estate and inheritance tax laws in upcoming years, as the federal laws change. Some states may decide to decouple themselves from the federal law and keep their own estate and inheritance tax provisions. You can check with your County Tax Assessor’s office or the Indiana State Department of Revenue website for updated information.
Death, just as most things in life, is subject to taxes at both the federal and state level. The federal estate tax applies on the value of the assets a person leaves behind. For the year 2008, this tax applies on estates with a total value of $2 million or more. In 2009, only estates valued at $3.5 million or more will be subject to the federal estate tax, and in 2010 the tax is scheduled to be repealed, only to reappear in 2011 in its original form.
The estate tax is levied on the estate and is paid before any assets are distributed to the heirs. An inheritance tax is different, and is charged on the right to receive property by inheritance. An inheritance tax therefore falls on the heirs, or beneficiaries of an estate. The federal government does not charge an inheritance tax, but a few states do, and Indiana is one of them. Indiana also charges a state estate tax.
Who is subject to the Indiana state inheritance tax?
You could be subject to the Indiana state inheritance tax whether or not you are a resident of Indiana. The determining factor is whether the decedent was a resident of Indiana at the time of death, or held real or tangible property in Indiana, if not a resident of that state.
According to the Hamilton County Tax Assessor’s office, the Indiana inheritance tax applies to real estate, which includes land and everything permanently attached to the land, and tangible property located within Indiana that belonged to a decedent who was a resident of Indiana. It also applies to the decedent’s intangible property, regardless of where it is located, when the decedent was a resident of Indiana. Intangible property includes money, deposits, stocks and bonds, and any other types of property interests. The tax also applies to interests in real and tangible personal property located in Indiana if the decedent was not an Indiana resident.
Life insurance proceeds payable to a named beneficiary are not subject to the Indiana inheritance tax. Also excluded are real estate and tangible personal property located outside the state.
For decedents who were residents of Indiana, the inheritance taxes are determined by the Probate Court. For nonresidents who held assets in Indiana, the Inheritance Tax Division of the Indiana Department of Revenue determines the inheritance taxes.
Exemptions and rates
The Indiana Inheritance Tax is charged at progressive rates that increase the more distant your relationship from the decedent. And there are exemptions that decrease the more distant your relationship. In general, the closer your relationship to the decedent, the higher your exemption and the lower your tax rate will be.
A surviving spouse is 100% exempt from the Indiana inheritance tax. Charitable contributions are also eligible for a 100% exemption.
Lineal ancestors such as parents and grandparents, and lineal descendants including children, stepchildren and grandchildren are eligible for an exemption of $100,000 each. According to Monroe Bank, the progressive tax rates that apply on these ‘Class A’ beneficiaries range from 1% to 10% after the exemption.
Brothers and sisters, their lineal descendants such as nieces and nephews, and daughters-in-law and sons-in-law are eligible for an exemption of $500 each. The tax rates on these ‘Class B’ beneficiaries range from 7% to 15% after the exemption. Other persons, including aunts, uncles, cousins, nieces and nephews by marriage, friends, and corporations are eligible for an exemption of $100 each, with tax rates on these ‘Class C’ beneficiaries ranging from 10% to 20%.
Because of the 100% exemption, if a surviving spouse inherits the entire estate, an inheritance tax return does not have to be filed. For other heirs and beneficiaries, an inheritance tax return does not have to be filed if the amount each one inherits does not exceed the exemption amount. For example, if an estate with a value of less than $200,000 is left in equal parts to two children, no inheritance tax would be owed due to the $100,000 exemption each one of them has.
Indiana Estate Tax
The Indiana estate tax is imposed on the value of the decedent’s estate. Many states levy an estate tax for the exact amount of the credit for state death taxes that is allowed on the federal estate tax return. This is often called a “pick-up” tax, in the sense that the states pick up any slack left under the federal estate tax laws.
In Indiana, the estate tax is the difference between the Indiana portion of the credit allowed on the federal estate tax return and the amount of inheritance tax actually paid. If no federal estate tax return has to be filed, or if the amount of the credit for the state death tax on the federal estate tax return is less than the Indiana inheritance tax paid, there should be no Indiana estate tax owed.
How to file
The Hamilton County Tax Assessor’s office points out that according to Indiana law, each estate must file one Indiana Inheritance Tax Return on Form IH-6 on behalf of all the beneficiaries, when the exemptions do not exceed the total value of the estate.
The return is due one year after the decedent’s date of death, and must be filed with the probate court of the county in which the decedent resided. Form IH-6 can be obtained from the county Assessor’s Office, and is also available for download on the Indiana Department of Revenue website at www.in.gov/dor.
The inheritance tax is due 18 months after the date of death. If payment is made within 9 months from the date of death, there is a 5% discount. After 12 months, interest accrues at 10% per year on any unpaid portion.
Potential changes
There could be changes in the states’ estate and inheritance tax laws in upcoming years, as the federal laws change. Some states may decide to decouple themselves from the federal law and keep their own estate and inheritance tax provisions. You can check with your County Tax Assessor’s office or the Indiana State Department of Revenue website for updated information.
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