Christene (Chris) Krupa Downs
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Do You Owe Taxes After You Die In Texas?

Christene Krupa DownsReviewsout of 7 reviews
Christene “Chris” Krupa Downs
Rated by Super Lawyers

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estate planning
Estate planning

There is no inheritance tax or estate tax in Texas. An inheritance tax is one that a beneficiary of an estate must pay on their inheritance. On the other hand, an estate tax is paid to the state by the deceased’s estate (the contents of all accounts, cash, and personal and real estate property).

Even though Texas has no estate or inheritance tax, that doesn’t mean you should neglect estate planning. If you die without a will or intestate, your heirs may receive much less than you’d like. If you’re unsure what an estate plan is or what you need to protect yourself and everything you’ve worked hard for all your life, turn to an experienced Dallas estate planning attorney.

What Taxes Could I Owe After I Die in Texas?

Beneficiaries in the Lone Star State will not have to pay an inheritance or estate tax. However, this does not necessarily mean the deceased’s estate will not owe taxes. If the deceased person owed the IRS back taxes, the government can claim the outstanding amount as a creditor.

Possible taxes that the estate administrator may have to pay on behalf of the deceased include:

  • Final federal income tax returns
  • Any state income tax for income earned in another state
  • Federal estate or trust income tax

Some estates must file a federal tax return nine months after the individual’s death. It may be possible to have an extension, but the estate administrator must request an extension before the nine-month deadline expires. Not every estate must file a federal tax return, though, only ones with a value over a certain amount, which changes yearly (in 2024, the amount was $13.61 million). If the estate must file a federal return, the estate administrator needs an Employer Identification Number (EIN) assigned by the IRS.

Other Tax Considerations for Texas Beneficiaries

Although there is no estate or inheritance tax in Texas, this doesn’t mean that beneficiaries living in Texas will always get their inheritance tax-free. If you live in Texas but inherit money or property from someone living in a state with an inheritance tax, you’ll owe that state tax on your portion of the estate.

Kentucky, Iowa, Maryland, Nebraska, New Jersey, and Pennsylvania all have an inheritance tax, so if you are the heir or beneficiary of someone who lived in one of these states, you must file a state inheritance tax return with that state. However, Iowa is gradually phasing out inheritance taxation, dropping rates until the tax is eliminated in 2025.

If you inherit property in Texas, you do not have to pay an inheritance tax on the property’s value, but you will have to pay property taxes once the property legally belongs to you. Texas has some of the highest property tax rates in the nation, so you may wish to speak with a financial planner if your Texas inheritance is mostly real estate.

Estate Planning and Financial Advice From a Dallas Estate Planning Attorney

Determining what you may owe as a beneficiary, or what you have to file and pay on behalf of an estate if you are the executor of a will, can be confusing. A trusted estate planning attorney can help. They can help untangle the complexities of estate and inheritance taxes and guide you through sorting out the tax burden you or your loved one owe. Contact an estate planning attorney today for estate administration advice, financial estate planning, or questions about Texas probate.

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