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valued at $3.5 million or more will be subject to the federal estate tax, and in 2010 the tax is scheduled to be repealed, only to reappear in 2011 in its original form.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.

Buying a Second Home for Leisure

Once upon a time buying a second home was something only the very rich and influential could afford to do. Not so anymore. Today the real estate market has become more and more accessible (and affordable) for those interested in purchasing a second home.

Invest your money in a second home can be a great investment cause it can give you a tax deduction which is similar to mortgage-interest tax break. This can be a good way in diversifying your assets as well. And if the homeowner (s) should decide to rent the property instead of live in it themselves, they will not only collect extra income, but may also be able to deduct depreciation.

Beyond the financial incentives, are there other reasons to buy a second home? Of course! Some people are looking for more than an investment, instead they see a second home as leisure. And why shouldn’t they?

The prospect of buying a second home can be an exciting one. A “home away from home” offers people the opportunity to escape for the weekend or a vacation with family in a relaxing, less stressful environment than they are accustomed to in their day-to-day lives. The idea of ‘splitting their time’ between two residences is a very attraction option to many. Others still are thinking ahead to their retirement days and would like to retire somewhere warm (especially those who live in areas with harsh winters).

More people choose the location of their second home based on where they truly want to live because it is a spot that is near and dear to their heart. While a first home might have been purchased in a particular area due to financial considerations, proximity to school, work, amenities, family members etc., a second home can more than anything be what, and where, the owners want it to be. No longer is the concern how close you are to bus routes, the office, the shopping mall, your children’s doctors and dentists but now blissful enjoyment takes over. That is why many think of owning a second home as a dream come true.

There are certain locations that are most popular for buying a second home. These locations include the seaside, hillside and valleys. These places are good for people who are yearn for personal privacy, sound of birds, rhythm of the sea or having sun bath under mild sun shines.

No matter what your main concerns are, you should feel comfortable knowing that a second home can take care of all the concerns that you have. Leisure time can take on a whole new meaning (and a much greater one) once you can use it for all the things you’ve always wanted to do. A second home can provide all that, and so much more.

A Quick Guide to New FHA Guidelines for Refinancing

The FHA refinancing regulations are modified in order to clarify certain aspects of FHA refinance rules. It is also to tighten up those regulations in other areas. The few changes are the modifications to streamline refinance program, which is a noncredit qualifying refinancing loan.

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The availability of refinancing tempts many borrowers to apply for FHA insured mortgage. Individuals opt for an adjustable-rate loan, and refinance it later with a better interest rate. However, the new rules limit the time, at which you can avail this facility.

Mandatory Changes in Guidelines

Before a borrower can apply for refinancing, it is necessary to own the property in stipulated time and make the required payments. According to the new rules, it is mandatory for the borrower to make a minimum of six payments against the mortgage being refinanced.

As per the new rules, one has to wait for a minimum of 210 days from the loan closing date, before you can request for refinance. Apart from these, the borrowers no longer have to verify employment and income for a streamline refinance transactions. This has changed the process for the sellers, and does not directly affect the borrower.

FICO Scores under New Guidelines

The new rules have assured strong premium flow of revenue, and have eliminated the unnecessary credit risk. The requirements for the FHA loans concerning the FICO score requirements as well as down payment has also changed. The new borrowers must have a minimum average rating of 580, for availing the benefit of paying a down payment of 3.5 percent.

New borrowers who have a FICO score of less than 580 have to put a down payment of at least 10 percent. This reduces the risk for the lenders, and provides access for borrowers who have performed well in the past. However, borrowers with a score of exactly 580, still find it difficult to get the loan, despite meeting all the requirements.

The minimum FICO score should be 620 to qualify for the FHA loan. In case the score is not sufficient, you can seek advice from the counselors. The credit and house counseling help the borrowers take appropriate steps regarding credit issues. This might take time, but time invested in raising the credit scores with the help of an FHA approved counselor, definitely aids in accomplishing your dream of owning a house. You can learn more by contacting the FHA counselors for assistance.

Consider a Payday Loan Online

Receiving payday cash loans are designed for those individuals that want money urgently. Oftentimes, people are faced by such situations in which they become strapped for cash because due to some unforseen emergency or debt.

These same individuals fall behind in their bill payments and consequently accumulate a sizable amount of debt. This can be a very irritating situation because creditors keep reminding you how much you owe to them.

This can also damage your credit report if you don’t repay your owed outstanding obligations. Hence, you can apply for a payday loan so that you can cover up your requirement of cash immediately and maintain a good credit history. These loans can be obtained within 24 hours.

They are secured loans. The amount of money that you can borrow is from £75 up to £750. Payday loans are also available online and it is not necessary for you go to the local lending shop. Applying online is just as easy, if not easier.

Those with poor or even terrible credit can still apply and be accepted for a payday loan regardless of credit status. However, there are a few requirements to meet the terms for receiving the cash such as be at least 18 years of age and must have a stable source of income.

Online Loan Lenders

The recent phenomenon of payday loans was considered to be misused by a few payday lenders. There have been some issues whereby borrowers which were in deep financial trouble with outstanding debt.

These situations have often created further worries and sometimes hardships if the borrowers were not able to pay back the loan on time. However, a common consumer is faced by times often in which he or she is out of cash and needs it immediately.

These tough times are caused by sudden accidents or emergencies that can leave a person penny less. If a person does not have any relative from whom he or she can borrow cash or if he or she does not want then payday loans can come very handy in these types of situations.

There should be a proper way developed through which neither the creditor nor the debtor is harmed because payday loans are very useful. The final outcome overall is that the borrowers are happy with their decisions for receiving the quick cash they need.

PPI Claims

You’ve heard it already. A PPI may seem beneficial due to the sugar-coated offers that it can provide. But if you look closely, you’ll see how much this policy has robbed you of your right to get the policies that you truly need.

If you still don’t have any idea, a PPI or a payment protection insurance is an add-on to the loans that you apply for. In the UK, a lot of the loans that people get have protection policies in them. Most of the time, people don’t even know why they have this insurance connected with their loans. And worse, some people didn’t even know they had it.

The initial idea behind PPI policies was that they are needed to help the individual compensate for any failure of reimbursement of loan payments due to certain instances that may occur. In this case, when a person is either involved in an accident or has contracted some kind of sickness and is incapable of earning any salary during a given period, his payment protection insurance come sin to play as it pays the bank off for a course not beyond twelve months. This way, the money continues to circulate.

The thing that strikes out when it comes to PPI is that even individuals who don’t really need it get to have these policies. Self-employed individuals such as entrepreneurs like Jason Hope or even retirees are the most common victims to such. With so many people trying to refund their PPI claims, most of them get their complaints rejected even before they pass through the second screening. In the end though, the FSA has found another way to give back to the loaners the money that they have lost from the PPI by compensating them with fixed amounts. This is a far cry from what they are supposed to get from banks, as it is clear that the money given by the FSA is not even close to the amount that people lost from the loans.

Charge Off and Bankruptcy Basics for Consumers

If you are faced with insurmountable credit card debt, you may be contemplating a charge off or a bankruptcy filing. If you find yourself at this crossroads, here is the information you need to make a wise decision, and even avoid these two scenarios. What's the Difference?

Charge Off

A charge off is simply that the creditor has written off your debt because you are unable to pay for six months or more. However, you will be dealing with credit collections agencies for a lengthy period of time after the charge off. A charge off does not relieve you of the debt, it is just a way for the credit card company to get it off their books. You must pay this debt back to the collection agency that takes possession of the debt after it is charged off. The charge off and subsequent collections will be reported to credit bureaus for seven years and hurt your credit score. As a result, it may be nearly impossible for you to obtain credit and even some jobs until the charge off comes off your credit report.

Bankruptcy

There are several types of bankruptcies, but general rules apply to all. In a bankruptcy, you petition the federal bankruptcy court to absolve you of your debts. If the court agrees, your debts are either written off completely, or reduced to a manageable level that you pay back over a period of years. You may be forced to give up your assets in a bankruptcy. A bankruptcy judgment will also be reported to the credit bureaus, and negatively affect your ability to obtain further credit, and even hurt your chances at many jobs. Likewise, if you are a federal government employee or military member, you can lose your security clearance due to a bankruptcy. You also must pay filing fees and retain an attorney to represent you in bankruptcy court. This is very costly, and is a long, drawn-out process.

How Can You Avoid Bankruptcy or Charge Offs?

The best way to avoid a charge off or bankruptcy filing is to quite simply pay off your debts. This is sometimes easier said than done. If you can't pay your bills now, work out a plan to do so as soon as possible.

First, create a budget and account for every penny. Make a list of your debts, when they are due, and the name of the creditor. Give top priority to the bills that are overdue. Pay these bills first. After all of your bills are caught up, begin to pay off your bills from the smallest to the largest. This may take a period of years, but is completely possible.

While you are working your pay-off plan, look for ways to bring in extra funds. Sell some assets. Find a part-time job. Create a part-time job if the unemployment rates are high in your area. Pick one of your skills and market your services to the community. There are many ways to bring in extra funds, you just have to be creative and think outside the box.

Next, contact your creditors to work out payment arrangements for any debts you are behind on. Many creditors are more than willing to work with clients that are behind, if they are assured that you are trying to do the right thing and make restitution for your debt. Work with your creditor to create a payment plan and stick to it.And make payments every month. If you skip a payment, the creditor will consider you in default and take further legal action against you.

While you are working on paying back your debt, stop using any credit. Cut up your credit cards and cancel the accounts. Close any revolving credit lines. Pay for everything with cash. In addition, put aside a small emergency fund of $1,000. After you get all of your debt paid off, you can add to this. While you are working on paying off debt, a small emergency fund will be enough to keep you afloat for a short time in the face of an unforeseen emergency.

In Conclusion

A bankruptcy or charge off can sometimes be an unavoidable choice. If you are in dire financial straits and have to choose, make sure you weigh your options carefully before jumping into a decision. Seek the services of a financial counselor to help you. Many cities offer free financial counseling and assistance for citizens in need, so check out these programs. There is light at the end of the tunnel, you just have to persevere.

Ways To Conquer Debt

In today's economy, many Americans find themselves suffering from a large amount of debt. Many are struggling just to keep up with the minimum payments from their creditors. While there are several techniques that can be applied to conquer your debt, credit consolidation still stands as the quickest and most reliable method. There are many financial institutions that offer credit consolidation loans. What these types of loans do is group all your debts into a single loan, which is likely to carry a lower interest rate than your existing debt.

One of the first things that you need to do to conquer debt is to find out exactly what you owe. Many people overlook this simple rule. Determine how much your total debt is, then determine how much your monthly bills are. Include payments on your debt when you calculate your monthly bills.

The next step is to determine your discretionary income. The difference of income minus necessary expenses is your discretionary income. After you have done this, it is time to start making decisions. You have to figure out what you can afford to pay, and what you have to cut out. Things that are absolutely necessary should be at the top of the list, while things that are not should remain at the bottom.

Once you have established this prioritized list, stop adding on to your debt. You should start using cash at all times to pay for the things that you want. You don't have to close your credit card accounts, you just have to stop using the cards completely until you have paid your debt down. If you do close your credit card accounts, you stand a chance of negatively impacting your credit rating.

If you have a credit card and have only been making the minimum payment every month, then make sure that you start doubling up on your payments. When you only make the minimum payment, the interest rate has time to accumulate more over a period of time. You also want to try to pay more on cards that you have with higher interest rates. As a general rule, you should start off with any cards that have an interest rate of 10% or more. You also have the option of calling the credit card company and asking them to lower your interest rate. If they agree to drop your interest rate by even 5%, this could mean hundreds of dollars of instant savings.

If you have any extra income, put that towards your debt. People who are serious about ending their debt, tend to scrutinize their expenses. If you have any unnecessary expenses such as cigarettes, alcohol, lunch money, etc., cut down on it. You also want to keep track of your progress. Use a spreadsheet with your personal debt data on it, and update the spreadsheet every month. This will allow you to see exactly how much progress you are making toward your goals. It is also a good idea to get your credit report on an annual basis.

If you are sticking to your plans, then your credit rating should go up every year. Sometimes there is inaccurate information on your credit report, so make sure you address those issues as soon as possible. You should create an emergency fund by using a portion of your discretionary income. You should take somewhere between 5% to 10% of your income and allocate it towards your emergency fund. If you cannot afford to allocate that mush of your income to your emergency fund, just do what you can. If you put these principles into action immediately, you should be out of debt in no time.