[youngshwa]

A follow up, what is interitance tax ? From a US Citizen.

For example, if my parents gave me money, as long as they paid tax on it, I don't have to pay tax on the money given to me? Or is that a whole new ball game? Is there a limit on which I can get funds from a US Citizen and not pay taxes?

Thanks.

[Fr_Chuck]

no, in the US, if they give you over a certain amount ( with them living)
you have to pay a gift tax on it, if it is over a certain amount of money
( sorry not sure what that limit is)

If they die, and your get their money and they have not arranged that transfer before hand by having your name on the accounts, you go though probate and have to pay an inheritance tax on the money you get after they die, and have to pay tax on the value of their home ifyou et it.

[AtlantaTaxExpert]

Sorry, Fr Chuck, you don't quite have it right.

When a gift in excess of the annual exemption amount (which is $12,000 for 2006) is given, a gift tax return must be filed by the giver of the gift, not the recipient. A gift tax may or may not be due. It depends if the giver wants to use part of his/her Unified Credit (the credit that can be used to exempt the giver from gift taxes or an estate from paying the federal estate tax).

On the federal level, the "death" tax is called estate taxes. Inheritance taxes normally apply to the state-level death taxes.