While taxes and death, both are inevitable, one might be able to do something about the so-called death taxes, i.e. the estate and the inheritances taxes. Essentially, when a person passes away, an inheritance or an estate tax, or sometimes both are levied on the assets and properties that are transferred to the beneficiary or beneficiaries. This article explains the death taxes as well as outlines the states which levy both these taxes individually as well as the states where the taxes overlap.
Estate and inheritance taxes
Estate taxes are levied on the assets, properties and money amounts that pass down from the decedent to his/her heirs. The tax is levied on the estate’s value. The federal estate tax exemption is $5.49 million, with a maximum tax rate of 40%. This means that the Internal Revenue Services (IRS) will only tax the value of the estate higher than the exemption amount. While the federal estate taxes cannot be avoided, the state estate ones can be dodged, depending upon where you live. As of 2017, 14 states (plus the District of Columbia) levy their own state estate taxes on top of the federal estate tax. These are Washington, Massachusetts, Oregon, Rhode Island, Minnesota, Maine, Connecticut, Vermont, New York, NJ, Maryland, Illinois, Hawaii and Delaware, plus the District of Columbia.
Inheritance taxes, on the other hand, apply to the property or gift bequest of an individual, essentially meaning each and every of inheritance including money, assets and property. Thus, while estate tax is paid on the deceased’s estate value, inheritance tax applies to individuals, i.e., each of the beneficiaries who inherit the decedent’s estate pay inheritance tax. As of 2017, the six states of Maryland, Iowa, Kentucky, Nebraska, Pennsylvania and NJ levy inheritance tax.
Tax exemptions and rates
Washington appears to be the costliest state to die in, with a maximum tax rate of a whopping 20% and an exemption amount of just $2.1 million. Washington’s tax rate is a whole 4% higher than the next ones in line Oregon, Massachusetts and the District of Columbia which have low exemptions of just $1 million and maximum tax rates of 16%. Minnesota and Rhode Island are next with a 16% tax rate and exemptions at $1.8 million and $1.15 million, respectively. Connecticut has a 12% tax rate and an exemption of $12 million, while Maine has a tax rate of 12% and an exemption of $5.49 million.
When it comes to inheritance taxes, Nebraska taxes the most at 18% and an exemption of $10,000. Kentucky has a 16% tax rate and a $500 exemption, Pennsylvania and Iowa have a tax rate of 15% each and no exemptions. The worst hit are Maryland and NJ, which have the unfortunate combination of both estate and inheritance taxes. Maryland has an exemption of $1,000 and a tax rate of 10%, while NJ’s tax rates depend on relationship between the decedent and beneficiary, as well as the amount received.
There are companies that work on collecting and maintaining credit information of consumers. These are known as credit reporting agencies (CRAs). There are three such major CRAs in the country, namely Equifax, Experian, and TransUnion. Apart from these, there are other smaller-scale agencies too that specialize at the job. If you’re worried about “where to get my credit score?,” the larger CRAs are the most reliable bets.
These major CRAs obtain information from companies that you hold business and transactions with. People or companies that lend you money regularly report to these CRAs on your repaying status. There is also detailed information on the amount you are indebted and whether you have ever defaulted on your payments. Aside from the reports obtained from lenders, these companies also tally your general records based on certain other aspects. Some of these aspects are your public records from the local and state judiciary. These include your tax records and bankruptcy information. This information makes up an important chunk of your credit score and its report.
Equifax
Present in 24 countries, Equifax is an agency that offers consumers protection against identity theft and credit fraudulence. They also sell credit reports and credit monitoring assistance to businesses.
Experian
Experian started off in London and is now a trusted agency in 39 different countries. It provides you with a credit score, credit report, and even credit tracker on subscription. The agency uses FICO 8 system of credit score calculation. Experian was a part of Forbes’ “World’s Most Innovative Companies” in 2018.
TransUnion
Based across 30 countries with a database of over 1 billion consumers, TransUnion is another CRA giant. The agency, like the other ones, will provide you with your credit score and your credit reports. In case you decide to freeze your TransUnion credit report, it will also go the extra mile to notify Equifax and Experian, which frankly is a big help especially in case of identity theft and credit fraud.
So, the next time you are sat wondering “where to get my credit score?,” think of these three giants that provide you with an annual credit score and credit report for free once each year. However, if you are looking for more frequent updates, you can subscribe to their services and receive your monthly updates.
Did you know that you have more than a single credit score? Agencies calculate your credit score based on the data in your credit reports. If you are wondering, “where to get my credit score?,” there are three main credit reporting agencies. These can have different credit scores for you if your information on each of their credit reports is different. Also, these agencies charge a fee to reveal your credit score.
Recently, it has become easier to track and get hold of your credit score without paying any fees. You can get it from your credit card company, your loan provider, and even from a non-profit counselor. Here are a few tips you can use to check your score.