Indiana Inheritance Tax Return for Non-Resident Decedent (Instructions)

Inheritance Tax Return for Non-Resident Decedent (Instructions)
Form IH-12INST
Instructions for Completing
Indiana Inheritance Tax Return for Nonresident Decedent
This form does not need to be completed for those individuals
dying after Dec. 31, 2012. For those individuals dying before
Jan. 1, 2013, this form may need to be completed.

Revenue determines that, due to an unavoidable delay, the tax
cannot be determined within 12 months, the department may
reduce the interest rate to 6%.

Property Subject to Taxation

Transferee Classes, Exemptions, and Tax Rates

Indiana’s Inheritance Tax is imposed on the transfer of ownership
interests of a decedent. The tax is based upon the value of ownership
interests transferred to each transferee and the relationship of the
transferee to the decedent. The three classes of transferees have
different exemption amounts and graduated tax rates for each
class.

Indiana’s Inheritance Tax is imposed on transfers of real property
and tangible personal property that is located within Indiana when
the decedent/owner is not domiciled in Indiana. The transfer of
intangible property interests is not subject to tax for nonresidents.

Who Must File

The personal representative of the estate of an nonresident must file
the Indiana Inheritance Tax Return for a Nonresident Decedent
(Form IH-12). If there is no personal representative, one of the
following must file: an heir, a trustee, a joint owner, or another
transferee. No filing is required if the total fair market value of the
property interests transferred by the decedent to each transferee
under a taxable transfer(s) is less than the exemption provided to
each transferee. Only one return should be filed per decedent.

For dates of death after July 1, 1997, but before Jan. 1, 2012, the
following classes and exemptions apply:
Surviving spouse and charitable organizations are 100% exempt.
1.	 Class A
Parents, children, grandparents, grandchildren, and other
lineal ancestors and lineal descendants and persons legally
adopted before emancipation....................................... $100,000
*For deaths after June 30, 2004, stepchildren are Class A.
*For adoptions completed before July 1, 2004, adopted
persons adopted after emancipation are Class A .
2.	 Class B
Brothers, sisters, lineal descendants of brothers or sisters,
daughters-in-law, and sons-in-law.............................. $500
3.	 Class C
Anyone not listed above including but not limited to aunts,
uncles, cousins, friends, nieces, and nephews by
marriage........................................................................... $100

When to Use This Form

Use this form only if the decedent was a not a resident of Indiana at
the time of death. For a resident decedent, use Form IH-6 found at
www.in.gov/dor/3509.htm or contact the Indiana Department of
Revenue, P.O. Box 71, Indianapolis, IN, 46206-0071 or call
(317) 232-2154 or email [email protected] for a copy of
Form IH-6.

When to File This Form

This form must be filed within 9 months of the date of death.
If the IRS allows an extension to file a federal estate tax return
(Form 706), the corresponding due date for filing Form IH-12 is
automatically extended for the same period of time. However, an
extension will not stop the accrual of interest for late payment of
the tax.

For dates of death after Dec. 31, 2011, the following classes and
exemptions apply:
1.	 Surviving spouse and charitable organizations are 100%
exempt.
2.	 Class A
Parents, children, stepchildren, spouse, widow, widower
of a child or stepchild (sons-in-law or daughters-in-law),
grandparents, grandchildren, other lineal ancestors and lineal
descendants, and children adopted prior to emancipation	
$250,000
3.	 Class B
Brothers, sisters, and lineal descendants of brothers or sisters
(blood nieces and nephews).......................................... $500
4.	 Class C
Anyone not listed above including but not limited to aunts,
uncles, cousins, friends, nieces, and nephews by
marriage........................................................................... $100

Where to File This Form

Form IH-12 must be filed with the Indiana Department of
Revenue, P.O. Box 71, Indianapolis, IN 46206-0071. Payments
made within 9 months of the decedent’s date of death receive a
5% discount. Payments made more than 1 year after the date of
death accrue interest at 10% per year from the date of death until
the date of payment. If the department determines that, due to an
unavoidable delay, the tax cannot be determined within 12 months,
the department may reduce the interest rate to 6%.

Payment

The nonresident inheritance tax must be paid to the Indiana
Department of Revenue, P.O. Box 71, Indianapolis, IN
46206-0071. Payments made within 9 months of decedent’s date
of death receive a 5% discount. Payments made more than 1 year
after the date of death accrue interest at 10% per year from the
date of death until the date of the payment. If the Department of

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The inheritance tax rates for each class are:

If the decedent died testate, attach a copy of the will to the return.
If the decedent died intestate, check the box in item 7.

Class A
Net Taxable Value of
Property Interests
Transferred

Even if no U.S. Estate Tax Return (Form 706) is required to be
filed, you must check the appropriate box in item 11. Even if you
file a Form 706 with the IRS, you are still required to file a copy
with the Indiana Department of Revenue.

Inheritance Tax

$25,000 or less

1% of net taxable value

Over $25,000 but not over
$50,000

$250 plus 2% of net taxable
value over $25,000

Over $50,000 but not over
$200,000

$750 plus 3% of net taxable
value over $50,000

Over $200,000 but not over
$300,000

$5,250 plus 4% of net taxable
value over $200,000

Over $300,000 but not over
$500,000

$9,250 plus 5% of net taxable
value over $300,000

Over $500,000 but not over
$700,000

$19,250 plus 6% of net taxable
value over $500,000

Over $700,000 but not over
$1,000,000

$31,250 plus 7% of net taxable
value over $700,000

Over $1,000,000 but not over
$1,500,000

$52,250 plus 8% of net taxable
value over $1,000,000

Over $1,500,000

$92,250 plus 10% of net
taxable value over $1,500,000

Schedule A, Real Estate

List every parcel of Indiana real property in which the decedent
had any right, title, or interest at the time of death and that was
transferred at death by will or by intestate succession. Include real
property that the decedent was buying on contract at the time
of death. Do not include real property held jointly with rights of
survivorship with one or more persons, real property held by the
entireties, real property held in a trust, or real property that the
decedent was selling on contract on this page because it will be
reported on Schedule C.
Describe the property in enough detail so that it can be identified
for valuation. Example: If the will refers to the property as “the
Smith Farm,” that land should be listed as “the Smith Farm”
followed by its legal description on Schedule A. If the real property
is transferred in two or more parcels to different transferees, each
parcel should be separately valued on this schedule. To assist in
auditing the return, include the parcel number along with the real
estate description and address.

Class B
Net Taxable Value of
Property
Interests Transferred

Schedule B, Tangible Personal Property

Inheritance Tax

$100,000 or less

7% of net taxable value

Over $100,000 but not over
$500,000

$7,000 plus 10% of net taxable
value over $100,000

Over $500,000 but not over
$1,000,000

$47,000 plus 12% of net
taxable value over $500,000

Over $1,000,000

$107,000 plus 15% of net
taxable value over $1,000,000

All tangible personal property owned individually by the decedent
that was physically located in Indiana at the time of the decedent’s
death and that is transferred by will or intestate succession at death
is listed here, including but not limited to:
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Class C
Net Taxable Value of
Property
Interests Transferred

Inheritance Tax

$100,000 or less

10% of net taxable value

Over $100,000 but not over
$1,000,000

$10,000 plus 15% of net
taxable value over $100,000

Over $1,000,000

$145,000 plus 20% of net
taxable value over $1,000,000

Household goods
Automobiles
Works of art
Books
Silverware
Growing crops
Clothing
Jewelry
Boats
Livestock
Farm machinery
Crops in storage

This schedule does not include tangible personal property that the
decedent owned jointly or that was transferred by some means
other than by will or by intestate succession. Such tangible personal
property should be listed on Schedule C.

General Instructions
Indicate the nonresident decedent’s date of death in box 3, and
place the decedent’s Social Security number in box 5.

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Schedule C, Transfers During Decedent’s Life

Include the full fair market value of the jointly owned
property on Schedule C. If you believe that less than the full
value of the entire property is includible for tax purposes,
you must establish your right to exclude part of the value.
Enclose any documentation that substantiates the use of the
lesser value with the return.

Any transfer of Indiana real property and tangible personal
property located in Indiana by the decedent to a transferee that
is completed at death and is not transferred by will or by intestate
succession should be listed on this schedule:

Schedule D, Deductions and Recapitulation

1.	 Trust
Indiana real property and tangible personal property located
in Indiana that the decedent transferred into a trust prior
to death may be subject to the Indiana Inheritance Tax. List
every real property parcel and tangible personal property
located in Indiana of the decedent’s trust on this schedule,
but do not list out-of-state real property. These assets are
to be valued at their fair market values on the date of the
decedent’s death or on the alternative valuation date if
properly elected on the Form 706 and accepted by the IRS.
Include a copy of the instrument creating the trust with the
return.

All necessary costs of administering the estate involving the
transfer of Indiana real property and tangible personal property
located in Indiana may be deducted from the value of property
interests transferred by the decedent by will, by intestate law, or
by trust.
The following items, and no others, may be deductible:
•	 Reasonable attorney fees, personal representative fees, and
trustee fees for administration of Indiana property subject to
Indiana Inheritance Tax
•	 Taxes on the decedent’s real property that is subject to the
Indiana Inheritance Tax, if the taxes were a lien on the real
property at the time of the decedent’s death
•	 Taxes on the decedent’s tangible personal property located in
Indiana that is subject to the Indiana Inheritance Tax if such
taxes were due and owing at the time of the decedent’s death
•	 Valid liens against Indiana real property and tangible personal
property located in Indiana that is subject to Indiana Inheritance
Tax
•	 Valid claims against the decedent’s domiciliary estate (estate is
opened in the state where the decedent was living at the time of
death) that will not be paid by the domiciliary estate because it
is exhausted
•	 Selling expenses when the property is actually sold during the
administration of the estate

2.	 Transfers in Contemplation of Death
List all transfers of Indiana real property or tangible personal
property located in Indiana that the decedent made by deed,
gift, or bargain sale in contemplation of death. Also list all
transfers made by the decedent within one year prior to
death. Indicate the date of each transfer, the name of each
transferee, the type of property interest transferred, and the
fair market value of the property interest transferred as of the
date of transfer.
Transfers within the year preceding death are presumed to
have been made in contemplation of the death. However,
this presumption is rebuttable. To rebut the presumption,
set forth all facts necessary for a proper determination of the
taxability of such transfers. Include supporting documents
with the return. See 45 Ind. Admin. Code 4.1-2-6.

Nondeductible items include, but are not limited to, the
following:

3.	 Transfers Intended to Take Effect in Possession or
Enjoyment at or after Death
List all Indiana real property and tangible personal property
located in Indiana transferred by the decedent for less
than full consideration if the transferee did not receive full
possession and enjoyment of such property until at or after
the decedent’s death. This includes property the decedent
transferred subject to a retained life estate. You must value
such property at full fair market value at the time of the
decedent’s death. Example: John deeds his farm to Mary and
Sam in 1970, retaining a life estate in the farm. In 2012, when
John dies, the full fair market value of the farm is included in
John’s estate for inheritance tax purposes.

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Decedent’s funeral expenses
Fiduciary income taxes
Funeral flowers
Federal estate tax
Estimated selling expenses of unsold real estate
Expenses connected with property not subject to Indiana
Inheritance Tax
•	 Funeral dinners
•	 Traveling expenses for beneficiaries, or others, to attend the
decedent’s funeral
•	 Indiana Inheritance Tax incurred as a result of a decedent’s
death

4.	 Joint Tenancies with Rights of Survivorship
All Indiana real property or tangible personal property
located in Indiana in which the decedent held an interest at
the time of death as a joint tenant with rights of survivorship
must be entered on this schedule. Describe the joint property
and list the names of the surviving joint tenants.

In the recapitulation section, list the individual totals from
Schedules A, B, and C and total all of the taxable assets. List the
total deductions from Schedule D. Subtract the total deductions
from the total taxable assets, and enter the total taxable estate.

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Schedule E, Persons Beneficially Interested in
This Estate and Inheritance Tax Computation

2.	 Supplemental Documents
When filing the return, enclose all supplemental documents
used to substantiate the statements contained in the return.
Examples include appraisals, trusts, affidavits, disclaimers,
elections, death certificates, and all other documents
necessary to complete the audit of the return.

List all persons, including corporations and other organizations,
receiving an interest from the decedent no matter how the transfer
took place. Also list the current address of each transferee. If
the space provided is not adequate to list all transferees, attach
additional pages immediately after this page.

3.	 Power of Attorney
If the preparer is not a lawyer or transferee of the decedent’s
estate and the personal representative wants the department
to disclose information to the preparer, a completed
Form IH-28, power of attorney, must be provided with
Form IH-12.

For individuals dying after June 30, 2012, a transfer to a
partnership, a limited partnership, a limited liability partnership,
an association, a corporation, a limited liability company, a trust,
or a similar entity will be considered a transfer to each individual
with a beneficial (whether discretionary or not) or ownership
interest in the entity. Each individual is liable for a percentage of
taxes imposed equal to that individual’s beneficial or ownership
interest in that entity. List the name and address of the entity
and each beneficiary or owner of the entity and their respective
percentage of beneficial or ownership interest in the entity. Please
contact a professional who is familiar with inheritance tax matters
or the department’s Inheritance Tax Division for clarification on
the taxation of transfers to such entities.

4.	 Dollar Amounts
Dollar amounts may be rounded to the nearest dollar.

List the relationship of the transferee to the decedent. Include
enough information to determine the class to which the beneficiary
belongs. For example: Lisa Smith, niece, daughter of decedent’s
brother. Also list the entire birth date of each transferee. Failure
to completely describe the relationship or to list the birth dates can
significantly slow the audit of the return.

5.	 Fair Market Value
All property transferred should be valued at the fair market
value on the date of the decedent’s death, except when the
alternative valuation is properly elected, used, and accepted
for federal estate tax purposes; then the alternative valuation
should also be used for inheritance tax. The fair market value
is the price to which a willing buyer and a willing seller agree,
neither being under compulsion to buy or sell and both being
fully aware of all relevant facts surrounding the exchange.
Enclose copies of all appraisals or closing statements for
such real estate to the return.

When stating the value of property transferred to each transferee
is to receive, list the total value of the property interests transferred
to each transferee. The amount of each transferee’s exemption is
determined by the relationship of that transferee to the decedent.

6.	 Additional Pages
If there is not enough space available on any page, continue
the list on an additional page and enclose it immediately after
such page.

Under the exemption columns, enter the appropriate exemption
amount based on the class of each transferee of the decedent’s
interests in real and tangible property.
Enter in the final column the amount of inheritance tax due
for each transferee. Compute the amount of tax due for each
transferee by multiplying that transferee’s net taxable interest (i.e.,
the total value of interest minus the applicable exemption) by the
appropriate tax rate.

Additional Requirements
1.	 QTIP Election
If you elect to treat property passing from the decedent as
property transferred directly to the surviving spouse for
Indiana Inheritance Tax purposes, the election must be made
in writing and enclosed with the original return. Electing on
the U.S. Estate Tax Return (Form 706) is not an election for
Indiana on this return. See 45 Ind. Admin. Code 4.1-3-5(b)
for an acceptable form for the Indiana QTIP election. Once
made, the QTIP election is irrevocable.

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