By Julie Garber. Wills & Estate Planning Expert
If you live in Tennessee, then you live in one of a handful of states that collects a state death tax. The estates of Tennessee residents who die in 2014, as well as the estates of nonresidents who own real estate and/or tangible personal property located in Tennessee, are subject to a state death tax under the following guidelines.
NOTE: State laws change frequently and the following information may not reflect recent changes. For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.
• Estate Tax vs. Inheritance Tax
While the Tennessee death tax is referred to as an "inheritance tax" in the Tennessee legislative code, it is really an estate tax since it is collected based on the value of the overall estate located in Tennessee (hence, a true "estate tax "); it is not a tax that is collected based on who actually inherits the estate located in Tennessee (a true "inheritance tax ").
Since the Tennessee legislative code refers to both an inheritance tax and
an estate tax, this article refers to the death tax that is currently collected under Tennessee law as an "inheritance tax," even though the tax is assessed against the assets located in Tennessee and not against the individual beneficiaries who inherit the estate.
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• When is an estate subject to the Tennessee inheritance tax in 2014?
For Tennessee residents, an estate may be subject to the Tennessee inheritance tax in 2014 if the total gross estate exceeds $2,000,000.
For nonresidents of Tennessee, an estate may be subject to the Tennessee inheritance tax in 2014 if it includes real estate and/or tangible personal property having a situs within the state of Tennessee and the gross estate exceeds $2,000,000.
Note: In May 2012, legislation was enacted which will phase out the Tennessee inheritance tax by 2016. See more on this below in the section titled "What is the future of the Tennessee inheritance tax? "
• What Tennessee inheritance tax forms must be filed?
All estates with a gross value that exceeds $2,000,000 must file a Tennessee inheritance tax return, Form INH-301. even if no Tennessee inheritance tax will be due as a result of applicable deductions and exemptions.