The Ohio estate tax was repealed, effective January 1, 2013. For deaths before that date, however, estates with a total value of more than $338,333 were subject to the Ohio estate tax. This was the lowest estate tax exemption amount of any state. (Federal estate tax returns for 2012, by contrast, are required only for estates of more than $5.12 million.)
Many estates that are larger than the exempt amount did not actually owe Ohio estate tax. For example, if the deceased person left everything to the surviving spouse, they passed free of estate tax, no matter how large the value.
If you're an executor for an estate of a person who died before 2013, you may have been required to file an Ohio estate tax return even if no tax was due. If the value of all of the assets in the “gross estate” exceeded the exempt amount ($338,333), a return must have been filed. The gross estate includes the property the deceased person owned at death, including:
- Ohio real estate (the deceased person's share, if you co-own it with someone else)
- Bank accounts and cash
- Investment accounts
- Other personal property (anything but real estate)
- Life insurance proceeds payable to your estate
- Retirement account funds
- An interest in any small businesses (whether they are sole proprietorships, limited liability companies, or small corporations)
- The value of any gifts the person made during life that are subject to the federal gift tax (generally, this means gifts of more than $13,000 to a single recipient in one calendar year)
The estate could owe Ohio estate tax even if the deceased person didn't live in the state. An executor would have been required to file a state estate tax return if the person owned property in Ohio—for example, Ohio real estate with a value greater than the exempt amount.
The Taxable Estate
The value of the taxable estate—the amount that’s actually taxed—is determined by taking allowed deductions from the gross estate. As mentioned, property left to the surviving spouse can be deducted (this is called the unlimited marital deduction). Other common deductions include funeral expenses, attorney’s fees, medical expenses, and real estate taxes. By the time all the deductions are subtracted, many estates don’t owe estate tax because the amount of the taxable estate is below the exempt amount.
The Ohio estate tax rate is far below the federal rate. For a taxable estate worth more than $338,333 but not more than $500,000, the rate is six percent. For amounts above $500,000, the rate is seven percent.
The Ohio Estate Tax Return
If an Ohio estate tax return was required, it should have been filed 15 months after the date of death. (The official due date was nine months after death, but a six-month extension was granted automatically.) The executor must have paid any tax due nine months after the death; after that date, interest accrued on unpaid amounts.
The Ohio department of taxation offers state estate tax forms and instructions, but preparing the estate tax return requires the help of an expert. The fee, which can be paid from estate assets, will likely be more than $1,000.