Do you owe inheritance tax?

Getty Images 1132291559
In Ohio, there is no estate tax on inherited funds, no matter how large the windfall.

By Beth Newcomb

If you lost a loved one in 2019 and find yourself with a bank account that received an influx of cash, tax time could present some questions, says Jay Nabors, a Cleveland-based attorney who focuses on estate planning.

“People who inherit money often wonder if they’re going to have to pay taxes on those funds,” he says. “First, we must distinguish between the tax imposed on the inheritance itself—an estate or inheritance tax—and the tax imposed on the income generated by the inheritance. In Ohio, there is no estate tax on inherited funds, no matter how large the windfall. So, if you inherit one dollar or a million dollars, you more than likely won’t have to pay estate taxes on it.”

The feds have a different take on that newfound wealth. “Estate taxes at a federal level come into play when you inherit $11 million or more,” Jay explains.

There are certain instances where you might have to take on the burden of income taxes assessed to the estate, and there are also some special inherited assets, like IRAs, that are subject to income tax.

“There are situations where you might have to pay something,” Jay notes. “It’s complicated. The estate may owe taxes, not the individual. Who takes on that tax burden sometimes becomes the question.”

The best way to know for sure if you’re required to pay income or estate taxes on inherited money is to schedule a meeting with Jay to review your standing. “I can let you know if you or the estate owe or not,” he says.

Jay is a partner with Weston Hurd LLP. He sees clients at the firm’s office in downtown Cleveland, in addition to meeting with clients in Strongsville upon request. Mention this story when you schedule an appointment. House calls and select evening appointments are available.

To reach Jay Nabors of Weston Hurd LLP, call him directly at 216-687-3205. His office is located at 1301 E. 9th Street, Suite 1900 in downtown Cleveland. Jay can also meet clients at 11221 Pearl Road in Strongsville.