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extension on inheritance tax & deduction

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I live in PA. My mother passed away in January. My mom made me the executor of my mom's estate. My mother had no life insurance. No stocks or bonds or anything like that. We all lived together & my sister & I are still living here. Her house was paid in full. She has no debt. he left the house to us. There are no other siblings. My mother was a widow. We want to live here the rest of our lives. We both have very low incomes & do not have the money for a lawyer to take us through the probate process. I know that I have 9 months till the date of death to pay the inheritances taxes on the house. I Can we get an extension in PA? Will it cost us money for an extension? Internist? Or how much? We don't want a lien to be put on the house or anything like that. I'm afraid that this might take a little longer since it's already been 5 months. Also when I apply to be executor I have to pay the fee and to put an ad in the paper. I think it's called the legal reporter. When we pay the estate tax after the house is in our name, can I deduct the fee for filing as executor and for the add in the paper from the house inheritance tax that I have to pay? I'm confused about when I can put the house in our name. I've read that we can't put the house in our name until everything is finished. But then I read that we don't have to wait until everything is finished before we can do that. My concern is that the regular yearly taxes are coming up very soon so we would like to have it in our name soon as not to complicate things. Forgot to note that the house is very small & valued at 48,170.
 
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LdiJ

Senior Member
I live in PA. My mother passed away in January. My mom made me the executor of my mom's estate. My mother had no life insurance. No stocks or bonds or anything like that. We all lived together & my sister & I are still living here. Her house was paid in full. She has no debt. he left the house to us. There are no other siblings. My mother was a widow. We want to live here the rest of our lives. We both have very low incomes & do not have the money for a lawyer to take us through the probate process. I know that I have 9 months till the date of death to pay the inheritances taxes on the house. I Can we get an extension in PA? Will it cost us money for an extension? Internist? Or how much? We don't want a lien to be put on the house or anything like that. I'm afraid that this might take a little longer since it's already been 5 months. Also when I apply to be executor I have to pay the fee and to put an ad in the paper. I think it's called the legal reporter. When we pay the estate tax after the house is in our name, can I deduct the fee for filing as executor and for the add in the paper from the house inheritance tax that I have to pay? I'm confused about when I can put the house in our name. I've read that we can't put the house in our name until everything is finished. But then I read that we don't have to wait until everything is finished before we can do that. My concern is that the regular yearly taxes are coming up very soon so we would like to have it in our name soon as not to complicate things.
You might want to see if Legal Aid in your area could provide you and your sister with any help or advice.
 

Taxing Matters

Overtaxed Member
The Pennsylvania inheritance tax is due the day the decedent dies and becomes delinquent 9 months after the decedent dies. The tax on property passed to children or grandchildren of the decedent is 4.5%. The tax is reduced by 5%, though, if you pay it within 3 months of the date of death, which means it's too late now for you to get that discount. What this means is that your return and the tax is due nine months after the decedent dies. It is possible, however, to get an additional 6 month extension to file the return. See the PA Department of Revenue page on the inheritance tax extension for information on that. The extension is not automatic. You must have good cause to get the extension, i.e. there must be some event outside your control that prevented you from filing within the 9 months. Also, the extension to file is not an extension to pay, so interest will be charged on the tax starting after the 9 month original filing deadline has passed. Form 1500 is used for filing the return. See the Form 1500 instructions for how to fill it out. You might want the help of a tax professional who has experience with doing inheritance tax forms to help you if you don't feel comfortable doing it yourself.

The executor of the estate needs to file your mother's will (if she had one) with the Orphans Court/Register of Wills, open probate and get the letters testamentary. From there the executor needs to round up all the bills that your mother owed and see that those get paid out of the estate, file the last income tax return for her (and any earlier returns she may have neglected to file) and pay those taxes. The estate would also pay for the administrative expenses of the estate and costs of burial. What's left over is what the beneficiaries get. The executor can distribute the house before everything is paid, but at the risk of being personally liable for any bills that come up that are not paid. That is why executors generally wait to distribute the major assets from the estate. If you are not sure what to do, see a probate attorney for help.
 

aldaron

Member
"The tax on property passed to children or grandchildren of the decedent is 4.5%. The tax is reduced by 5%, though, if you pay it within 3 months of

the date of death, which means it's too late now for you to get that discount."
Taxing Matters, according to your post no tax is owed at all if payed within 90 days of death. 4.5%-5%= -.5%.
 

Taxing Matters

Overtaxed Member
Taxing Matters, according to your post no tax is owed at all if payed within 90 days of death. 4.5%-5%= -.5%.
No. The tax rate is 4.5% when the property is passed to the kids. The tax, not the tax rate, is reduced 5% if you pay within 3 months (not 90 days) of the date of death.

For a simple example, if Amy's estate was worth $100,000 and she passed that all to her son Ben the inheritance tax would be $4,500 ($100,000 x .045). If paid within 3 months, however, that tax of $4,500 is reduced by 5%, which comes out to a reduction of $225 ($4,500 x .05). So the final tax if paid within 3 months would be $4,275. That can be nice bit of tax to save if you can manage to pay it in the first 3 months, especially for larger estates where that 5% tax savings becomes more significant.
 
My mother's house is small and valued at 48,170. My mother's only income was social security. So she didn't make enough $ to pay taxes exept the regular yearly school, ect. But she did file for the tax rebate every year. Does she have to pay anything or file anything other than the Pennsylvania inheritance tax that has to be paid within 9 months? I don't understand why the Pennsylvania inheritance tax is due in 9 month & not longer. My mother had Medicare & blue cross & it takes them sometimes over a year before they work out all the claims, ect,,, ???? How am I supposed to know exactly what my mother owes or doesn't owe by that time iwhen I have to wait for medicare & blue cross? What do families do in this situation? Is it true that if an estate is a very simple one, that certain parts of the probate process can be skipped over? If so, what parts would they be?
Also We got a medical bill in the mail for less then 2 hundred. When I called to ask a question about it, they told me hat they wrote it off. Someone else said that they had a credit card debt that the co. wrote off, then they said that they got something from the IRS saying that they owed that. I never asked the doctor's office to write this bill off, it was easily payable. I feel they did it to try to be nice. The last thing I need are any complications down the line! As the executor I am responsible for paying the bills, but I don't know what happens when a bill is written off!
 
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Taxing Matters

Overtaxed Member
If her only income was Social Security then there won't be any federal or Pennsylvania income tax returns to worry about. There may be property tax to pay, but that's not going to materially affect the inheritance tax. You need to determine what her house and other assets would sell for. Creditors that are willing to just forget about it (write it off) don't need to get paid because they aren't going to make a claim against the estate. Add up all the stuff she had, the house, furniture, bank account, whatever, then subtract the bills you know need to get paid and use that number to figure the inheritance tax. Don't make it harder than it is. If you don't get it quite right you can amend the return later. But use the information you have now to get the return filed and paid on time. If her estate is only worth around $50,000 or so then the inheritance tax will not be very large, around $2,250.
 
If her only income was Social Security then there won't be any federal or Pennsylvania income tax returns to worry about. There may be property tax to pay, but that's not going to materially affect the inheritance tax. You need to determine what her house and other assets would sell for. Creditors that are willing to just forget about it (write it off) don't need to get paid because they aren't going to make a claim against the estate. Add up all the stuff she had, the house, furniture, bank account, whatever, then subtract the bills you know need to get paid and use that number to figure the inheritance tax. Don't make it harder than it is. If you don't get it quite right you can amend the return later. But use the information you have now to get the return filed and paid on time. If her estate is only worth around $50,000 or so then the inheritance tax will not be very large, around $2,250.
Thank you so much! My concern is with the time it takes Medicare & Blue Cross to finish their paperwork. They take quite awhile with the claims to be processed. What if they don't finish by the 9 months? How will I know if sh'es going to get a medical bill before they finish? I'm worried that this will hold me up. I'm assuming that all the legal stuff has to be done by 9 months? The house is in her name only & she died on Jan 13. I'm assuming that My sister & I pay the properly taxes for this year because of leaving the house to us? Unless the estate pays the ist property tax because it's in her name? It doesn't seem right that the estate would pay for it . I assume my sister & I pay ?
 
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LdiJ

Senior Member
Thank you so much! My concern is with the time it takes Medicare & Blue Cross to finish their paperwork. They take quite awhile with the claims to be processed. What if they don't finish by the 9 months? How will I know if sh'es going to get a medical bill before they finish? I'm worried that this will hold me up. I'm assuming that all the legal stuff has to be done by 9 months? The house is in her name only & she died on Jan 13. I'm assuming that My sister & I pay the properly taxes for this year because of leaving the house to us? Unless the estate pays the ist property tax because it's in her name? It doesn't seem right that the estate would pay for it . I assume my sister & I pay ?
If there is money available in her estate it is perfectly acceptable for the estate to pay the property taxes.
 
The Pennsylvania inheritance tax is due the day the decedent dies and becomes delinquent 9 months after the decedent dies. The tax on property passed to children or grandchildren of the decedent is 4.5%. The tax is reduced by 5%, though, if you pay it within 3 months of the date of death, which means it's too late now for you to get that discount. What this means is that your return and the tax is due nine months after the decedent dies. It is possible, however, to get an additional 6 month extension to file the return. See the PA Department of Revenue page on the inheritance tax extension for information on that. The extension is not automatic. You must have good cause to get the extension, i.e. there must be some event outside your control that prevented you from filing within the 9 months. Also, the extension to file is not an extension to pay, so interest will be charged on the tax starting after the 9 month original filing deadline has passed. Form 1500 is used for filing the return. See the Form 1500 instructions for how to fill it out. You might want the help of a tax professional who has experience with doing inheritance tax forms to help you if you don't feel comfortable doing it yourself.

The executor of the estate needs to file your mother's will (if she had one) with the Orphans Court/Register of Wills, open probate and get the letters testamentary. From there the executor needs to round up all the bills that your mother owed and see that those get paid out of the estate, file the last income tax return for her (and any earlier returns she may have neglected to file) and pay those taxes. The estate would also pay for the administrative expenses of the estate and costs of burial. What's left over is what the beneficiaries get. The executor can distribute the house before everything is paid, but at the risk of being personally liable for any bills that come up that are not paid. That is why executors generally wait to distribute the major assets from the estate. If you are not sure what to do, see a probate attorney for help.
I'm really confused about something. How am I supposed to know if my mom will get any bills from medicare & Blue Cross within the 9 month period? My concern is with the time it takes Medicare & Blue Cross to finish their paperwork. They take quite awhile with the claims to be processed. What if they don't finish by the 9 months? How will I know if my mother is going to owe any medical bills by 9 months?How can I finish taking care of my mom's estate if I have to wait for medicare & Blur cross? I'm worried that this will hold me up. I'm assuming that all the legal stuff has to be done by 9 months?
 
If there is money available in her estate it is perfectly acceptable for the estate to pay the property taxes.
I'm really confused about something. How am I supposed to know if my mom will get any bills from medicare & Blue Cross within the 9 month period? My concern is with the time it takes Medicare & Blue Cross to finish their paperwork. They take quite awhile with the claims to be processed. What if they don't finish by the 9 months? How will I know if my mother is going to owe any medical bills by 9 months?How can I finish taking care of my mom's estate if I have to wait for medicare & Blur cross? I'm worried that this will hold me up. I'm assuming that all the legal stuff has to be done by 9 months?
 

Taxing Matters

Overtaxed Member
I'm really confused about something. How am I supposed to know if my mom will get any bills from medicare & Blue Cross within the 9 month period?
You don't.

I'm assuming that all the legal stuff has to be done by 9 months?
You don't have to and probably won't. That's why you file the return with the information you have at the time of filing and then amend the return if necessary later before you close the estate.
 

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