Iowa Inheritance Tax
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What Is Iowa's Inheritance Tax
Iowa collects an inheritance tax for property inherited, but the tax rate is dependent on how closely related the beneficiary is to the decedent. Moreover, Iowa has exemptions to the inheritance tax.
Exemption from Taxation
Inheritance tax is not collected if the decedent’s estate is $25,000 or less.
If the decedent’s estate is over $25,000, the tax will not apply to the following beneficiaries:
Surviving spouse of decedent
Lineal ancestors (i.e. parents or grandparents)
Lineal descendants (i.e. children, adopted children, stepchildren, grandchildren, etc.)
Religious services of up to $500
How the Tax Amount Is Determined
The tax amount is dependent on how closely the decedent’s ties are to the state of Iowa. If the decedent is a resident, then his entire estate will be taxed minus certain estate liabilities. But if the decedent is a nonresident, only real and tangible property owned in Iowa will be taxed.
Debts decedents owed
Mortgages on real property
Taxes accrued prior to death
Filing Inheritance Tax Return
The executor of the decedent’s estate is responsible for filing one single tax return. If no such tax return is filed, then the estate will not be distributed. The Iowa Probate Court requires copies of the inheritance tax return prior to any distribution action.
Consulting An Attorney
Please consult an estate attorney if you want to reduce your estate tax liabilities or if you need to file an extension for probate purposes.
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Last Modified: 06-08-2015 06:42 PM PDT
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