How Do You File a Pennsylvania Inheritance Tax Return?

The personal representative files form REV-1500, the Inheritance Tax Return for a resident decedent, in duplicate with the Register of Wills of the county where the decedent lived, within nine months after death. The Pennsylvania Department of Revenue's general information sheet, REV-720, sets the rates at 0 percent for a surviving spouse, 4.5 percent for lineal heirs, 12 percent for siblings and 15 percent for other heirs, and allows a 5 percent discount on tax paid within three calendar months of death.

The penalty for missing the deadline is capped, which many summaries leave out. The current REV-1500 (revision 08-24) says failure to file may subject the estate to a penalty of 25 percent of the tax ultimately found to be due or $1,000, whichever is less. Interest is a separate cost: REV-720 says interest on overdue inheritance tax is charged from nine months and one day after the date of death until payment. This guide covers who files and where, what goes on each schedule, how the rates and the early payment discount work, and what happens to property that skips probate. It explains how the tax generally works and is not legal or tax advice.

Who Files the REV-1500, and Where?

Pennsylvania inheritance tax is a tax on the value of property passing from a decedent to beneficiaries, with the rate set by each beneficiary's relationship to the decedent. REV-720 says the personal representative, meaning the executor or administrator appointed by the Register of Wills, is responsible for disclosing the decedent's property and filing the return.

The return goes to the Register of Wills in the county where the decedent lived at death, not to Harrisburg. In Westmoreland County, that office is at 2 N. Main Street, Suite 301, in the Courthouse Annex in Greensburg. It is open Monday through Friday from 8:30 a.m. to 4:00 p.m., and its phone number for estate matters is (724) 830-3177.

Our post on an executor's duties and responsibilities explains where the tax return fits among everything else an executor handles.

What Goes on the Return?

The REV-1500 is built from schedules, each covering one type of property or deduction. The current form lists:

• Schedule A: real estate

• Schedule AU: agricultural use exemptions

• Schedule B: stocks and bonds

• Schedule C: closely held corporations and sole proprietorships, with Schedule C-SB for the family-owned business exemption

• Schedule D: mortgages and notes receivable

• Schedule E: cash, bank deposits and miscellaneous personal property

• Schedule F: jointly owned property

• Schedule G: inter-vivos transfers and non-probate property

• Schedule H: funeral expenses and administrative costs

• Schedule I: debts of the decedent

• Schedule J: beneficiaries

• Schedules K, M and O: life estates and annuities, future interest compromises, and spousal trust elections

Schedule H is where much of the deduction value sits. The Department's Schedule H form, REV-1511, has lines for funeral expenses, personal representative commissions, attorney fees, the family exemption, probate fees, accountant fees and tax return preparer fees.

Values go on the return as of the date of death. Our firm's inheritance tax page explains that the tax is figured on the date of death value of each asset, so the first records to gather are:

• Bank and investment statements showing balances on the date of death

• The deed for any real estate and a supportable valuation as of that date

• Titles for vehicles and any jointly held accounts, with the names of the co-owners

• Receipts for the funeral and for estate expenses already paid

• Statements for debts the decedent owed at death

Collecting these early also makes it easier to estimate the tax in time for the discount.

What Are the Inheritance Tax Rates?

The rate depends on who receives the property, not on the size of the estate. The Department of Revenue lists:

• Surviving spouse: 0 percent

• Lineal heirs, such as children and grandchildren and their spouses: 4.5 percent

• Siblings: 12 percent

• Collateral heirs, such as nephews, nieces, aunts, uncles and friends: 15 percent

The Department also states that charitable bequests contained in the will are exempt. Its definition of lineal heirs includes stepchildren and adopted children, which matters for blended families. Our Pennsylvania inheritance tax page summarizes these rates and the deadlines.

How Does the 5 Percent Discount Work?

REV-720 allows a 5 percent discount on the tax paid within three calendar months of the decedent's death. The discount is tied to when the tax is paid, not when the return is filed, so an executor who can estimate the tax early can capture it even if the full return comes later within the nine months.

A simple example: if two children will owe a combined $9,000 at the 4.5 percent rate, paying within three months saves $450. On a larger estate the savings grow in proportion. The tradeoff is accuracy. An estimate made in the first weeks after a death can miss assets or debts, so it makes sense to work with counsel or an accountant to settle on a number you can stand behind.

What Happens If the Return Is Late?

Two things can happen. The REV-1500 warns that failure to file may subject the estate to a penalty of 25 percent of the tax ultimately found to be due or $1,000, whichever is less. Separately, interest starts running nine months and one day after death on any tax still unpaid.

Probate itself can take longer than nine months, so the tax deadline can arrive while the estate is still open. Our guide to how long the probate process takes explains why an estate may still be open when the return is due.

Does Property That Skips Probate Still Go on the Return?

Yes, in many cases. Avoiding probate and avoiding inheritance tax are different things. The REV-1500 includes Schedule F for jointly owned property and Schedule G for inter-vivos transfers and non-probate property, so assets that pass by joint title, trust or similar arrangements can still be reportable.

Property passing to a surviving spouse is taxed at 0 percent, so spousal joint ownership produces no inheritance tax. Joint property with a child, a sibling or a friend is different. Our posts on which assets are subject to probate and how to avoid probate court explain the probate side of that picture.

FAQ

When is Pennsylvania inheritance tax due?

Within nine months of the decedent's death. Tax paid within three calendar months of death earns a 5 percent discount.

Where do I file the REV-1500 in Westmoreland County?

With the Register of Wills, 2 N. Main Street, Suite 301, Greensburg, in duplicate, as the form and REV-720 require.

What is the penalty for filing the return late?

The REV-1500 says the penalty may be 25 percent of the tax ultimately found due or $1,000, whichever is less. Interest also runs from nine months and one day after death.

Do stepchildren pay the 15 percent rate?

No. The Department of Revenue counts stepchildren as lineal heirs, taxed at 4.5 percent.

Can the estate deduct the executor's fee and attorney's fee?

Yes. Schedule H includes lines for personal representative commissions and attorney fees, along with funeral expenses and probate fees.

Who signs and files the return?

The personal representative appointed by the Register of Wills is responsible for filing it, according to REV-720.

Inheritance Tax Returns and Estate Administration in Greensburg

David K. Lucas & Associates PLLC, at 140 South Main Street, Suite 301, in Greensburg, prepares Pennsylvania inheritance tax returns as part of estate administration for families in Westmoreland County and nearby counties. Attorney David K. Lucas handles estate administration and probate, and the firm helps executors locate assets, prepare state and federal tax forms and complete final distributions. Learn more about our probate attorney services.

Visit David K. Lucas & Associates or call 724-836-3300 today. Contact us for more information.