Who pays the NJ Inheritance tax?
INTRODUCTION
Transfer Inheritance Tax is a “beneficiary” tax, and is based on who specifically receives a decedent’s assets, and how much each beneficiary received.
https://www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/o10c.pdf
Currently, the law imposes a graduated Inheritance Tax ranging from 11% to 16% on the transfer of real and personal property with an aggregate value of $500 or more to certain beneficiaries.
https://www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/o10c.pdf
Class C: First $25,000 free, then taxed at 11%. Calculate taxable amount, then multiply by 11% to calculate amount due.
Class ”C” - Brother or sister of the decedent, including half brother and half sister, wife or widow of a son of the decedent, or husband or widower of a daughter of the decedent. -taxed at 11%–16%, with the first $25,000 exempt.
First $ 25,000
Next 1,075,000 11% tax
Class “D” - Every other transferee, distributee or beneficiary who is not included in Classes “A”, “C” or “E”. taxed at 15% Class D: taxed at 15%. Multiply amount by 15% to figure out tax due.
Benjamin Franklin famously said nothing in life is certain, except for death and taxes. Had he been alive today, he could have been referring to New Jersey. As of January 1, 2018, it no longer levies an estate tax, but that's not the case for many people who died in 2017 or their beneficiaries. There's also an inheritance tax and understanding the rules governing the NJ inheritance tax will ensure that you make the right financial decisions related to your role as a beneficiary.
Certain beneficiaries are exempt from the inheritance tax in the state of NJ. Others will be required to pay a tax on the inheritance based on the classification given them by the state.
Looking For Information About Spouses
If you’re married, you can leave all your assets to your spouse free of charge. Spouses are exempt from paying inheritance tax, and if everything you own goes to your spouse in your will, New Jersey won’t tax your estate, either. However, a caveat exists.
When someone passes away, New Jersey immediately places a tax lien against everything the person owned so the executor can’t legally transfer or sell any assets without the state getting its tax cut.
Also, someone does not want to buy a property that has the tax lien attached.
The executor must file Form L-9 for any real estate you owned and Form L-8 for financial assets with the Division of Taxation to have the liens lifted so your spouse can inherit them.
For non-spouse beneficiaries, the full inheritance tax return must be filed.
To have your Inheritance and Estate Tax questions answered by a Division representative, inquire as to the status of an Inheritance or Estate Tax matter, or have Inheritance and Estate Tax forms mailed to you, contact the Inheritance and Estate Tax Service Center at 609-292-5033 or email Taxation.NJInheritancetax@treas.nj.gov.
Obtaining More Information About Other Individuals
Your children, parents, grandparents and grandchildren do not have to pay inheritance tax on anything you leave them. However, bequeathing to them does not avoid your estate having to pay taxes on the assets you leave behind. For those dying in 2017 with an estate worth more than $2 million, estate tax is due in New Jersey. Your stepchildren and adopted children are included among these Class A beneficiaries.
New Jersey places your siblings and in-laws in its Class C beneficiary category. The state now exempts the initial $25,000 of the amount you leave to any of these people, but beyond that, they have to pay a rate that may reach as high as 16 percent.
If you leave everything to the housekeeper who cared for you in your old age, she’s going to pay dearly in New Jersey. She must pay 15 percent of everything worth up to $700,000, and 16 percent on any value over that. She’s considered a Class D beneficiary. This category catches everyone who doesn’t fall into Classes A or C. There is no Class B in New Jersey. Friends, significant others and business associates are all Class D beneficiaries.
If you leave everything to the housekeeper who cared for you in your old age, she’s going to pay dearly in New Jersey. She must pay 15 percent of everything worth up to $700,000, and 16 percent on any value over that. She’s considered a Class D beneficiary. This category catches everyone who doesn’t fall into Classes A or C. There is no Class B in New Jersey. Friends, significant others and business associates are all Class D beneficiaries.
Of course, if you choose to name the state of New Jersey as one of your beneficiaries, the state doesn't impose a NJ death tax. You can also leave everything to charity free of charge.
https://pocketsense.com/pays-inheritance-tax-new-jersey-1861.html
When to File Inheritance Tax
The executor, administrator, or heir-at-law of the estate must file an Inheritance Tax return (if required) within eight (8) months of the date of the decedent’s death. If tax is due, the tax also must be paid on the transfer of taxable real or personal property within eight (8) months of the date of the decedent’s death.
Interest always due at 10%
Interest is calculated at the annual rate of 10% on any direct tax or portion not paid within eight (8) months of the date of the decedent’s death. To make a payment and avoid potential interest, please see How To Pay.
No Extension to File permitted
There is no extension of time to pay tax due. Interest charges still apply to any unpaid tax. An extension of time is given only to file the return. If you cannot file the return on time, you may complete Form IT-EXT, Inheritance and Estate Tax Application for Extension of Time to File a Return.
Resident Decedents - What to File
You must file a paper return or form(s) to determine whether any tax is due or when a waiver is needed.
Note: Electronic filing is not available for Inheritance and Estate Tax returns.
Source https://www.state.nj.us/treasury/taxation/inheritance-estate/inheritance-taxfilerequirements.shtml
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