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Does Colorado Have an Inheritance Tax?

While there is no estate tax in Colorado, you may still owe estate tax to the federal government depending on the size of your estate due to the federal estate tax. Here’s everything you need to know about Inheritance Taxes in Colorado.
Does Colorado Have an Inheritance Tax?
Does Colorado Have an Inheritance Tax?
Planning an estate or inheriting from one brings many questions about how much of the estate's value will be eaten up by taxes. Does Colorado have an inheritance tax? Let's read more about Colorado estate planning and tax filing with Beem.
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Planning an estate or inheriting from one brings many questions about how much of the estate’s value will be eaten up by taxes. There is a lot of variation depending on the value of the estate. Does Colorado have an inheritance tax? Let’s read more about Colorado estate planning and tax filing with Beem.

Does Colorado Have an Inheritance Tax?

Colorado does not impose any estate, gift, or inheritance taxes. Some states impose inheritance taxes regardless of whether the beneficiary lives there. Therefore, holding assets in more than one state requires caution. Fortunately, there is an annual exclusion from federal gift tax. No gift tax return is filed if the gift amount falls below the threshold. 

How Can I Plan for Estate and Inheritance Taxes in Colorado?

Colorado benefactors must be aware of a caveat regarding inheritance tax. Setting up a trust is a good idea when planning your estate. A trust is a legal document that will be accessible to your beneficiaries. If you want to leave money to your beneficiaries, you must place it in a trust.

A trust is an essential tool when transferring complex assets or assets that may not pass directly through the title. When selling assets, you should also consult an attorney.

Establishing trust requires defining your goals before you begin. It is essential to determine your goals before creating your trust and how to pass your assets on to your beneficiaries.

Where Can I Find the Most Current Information on Colorado Inheritance Tax Laws?

Taxes on inheritances are levied on individuals who transfer assets to their beneficiaries. Taxes are calculated based on the value of assets gifted, and the tax rate is generally determined by the beneficiary’s relationship to the estate owner and the state where the beneficiary resides. Additional information on estate tax filing can be found on the Colorado Department of Revenue website.

Also Read: What Happens If You Don’t Pay RITA Taxes? 

Are There Any Exceptions or Exclusions to Inheritance Taxes in Colorado?

The federal government imposes an estate tax when an estate meets a certain exemption level. Filing a tax return is only necessary if the estate meets the exemption. The exemptions and thresholds for estate taxes will change annually, so keep that in mind. Do some planning in advance and keep track of it.

How Do Federal Estate Taxes Impact Inheritance in Colorado?

State inheritance taxes are also not applicable in Colorado. The federal government does levy an inheritance tax, however. It is still crucial to consider this if you have assets over $12.06 million. The upper limit is slightly higher than last year when it was $11.7 million. The amount has jumped over $12 million by 2022.

Conclusion

To summarize, Colorado has no inheritance tax. Inheritance taxes can hit beneficiaries of inheritances in some states. To minimize or avoid it, one has to decipher the different strategies available to them, how they function, and if they apply to you. A person can bring down the inheritance tax. Still, their beneficiaries will have to pay by knowing the difference between inheritance tax and estate tax and the particular rules of a state’s inheritance tax. Meanwhile, use Beem to file your federal and state taxes with ease to get the maximum refund on your returns.

FAQs

How much can you inherit without paying taxes in Colorado?

The amount has jumped over $12 million in 2022.

Does a spouse automatically inherit everything in Colorado?

In the case of a deceased person who died alone or without surviving children or parents, they are entitled to the entirety of the estate.

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Team Beem

Team Beem brings you the latest in the world of personal finance to you. From tips and tricks on how to manage money to how to get cash for emergencies, Beem is your destination for all the information you need to be smart about your money.

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This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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