If you have recently come into a lot of wealth through the will of a deceased relative, you could be confused with the various tax laws that affect your inheritance. Tax law that is concerned with inheritance is complicated. The complexity is due to the fact that these taxes are undergoing the “phase out” period, that is the government is trying to do away with the taxes over a period of time. The basics that are required by an individual to determine whether or not he owes the state inheritance tax is given below.

There is no need to pay inheritance tax if you happen to be the spouse of the deceased. A widow or widower is not expected to pay inheritance tax for recieving money from his/her deceased spouse’s estate. Inheritance tax is not collected on the money received from life insurance. The money that is received as insurance amount does not come under taxable income and is not considered for the payment of inheritance tax.

When the value of the estate is less than 2 million dollars there is no need to pay tax for the inheritance received from the estate. This tax law is presently subject to Act of Economic Growth and Tax Reconciliation of 2001. This law holds good till the year of 2008 ( no inheritance tax upto 2 million dollars), in the year 2009 the limit will increase to 3 million dollars. The Act is all set to be repealed altogether in the year of 2010. This is subject to the Congress and unless it acts you could be levied tax on inheritance as low as 1 million dollars.

Inheritance tax cannot be avoided by acquiring money from a person before he dies. If a relative of yours gives a part of his fortune before he dies, then the amount recieved will still be considered as part of inheritance and may be taxed. This comes under the category of gift tax. A person can give away amount upto $12,000 to a person without incurring any gift tax. A couple can donate double the amount. However a person can only recieve a million dollars before it starts to fall under the category of inheritance law.

The first thing you should consider when searching for tax prep software is the type of taxes you need to file. If you own a business or a home-based business, there is even software that can work for you. Many online software programs offer e-filing of tax returns. E-filing is a way of submitting your tax returns electronically online. There is no paperwork to file and mail, because the online tax software does it all for you. E-filing can save a lot of time and money, so be sure the tax software you choose has e-filing available for all types of tax returns. Many online tax preparation companies offer free e-filing on simple 1040EZ tax returns. Prices may vary on other tax forms.

Even though online tax software is very thorough and accurate, you may still want to talk to a person to troubleshoot problems or make sure you’re following the steps correctly. Many tax preparation software companies have customer service departments, where they offer support either online or on the phone. Before you agree to any terms online, check out the customer service and support the online tax preparation company offers, and whether it is free to access.

Make sure the software you choose addresses the needs of your specific situation. People who make a lot of charitable donations will want software that guides them through the necessary steps to make these deductions. Those who are self employed will need to file their taxes differently and therefore need an online tax program that is geared toward their needs. Some software only provides the means to file your federal taxes. You may also want to file your state taxes at the same time in order to save time. Look for online tax preparation software that includes all the features you need at a price that is within your budget.

Finally, tax preparation software should be made to receive updates as tax legislation, regulation and laws change. Most software should update itself with new guidelines as they become available. Read the fine print to make sure the tax software stays up to date with tax law to ensure that your return adheres to the current standards. With so many choices available, you should have no trouble finding the right one for you. Make sure it has all the features you need and provides you a customer service team if you need help. The right online tax software for you will be one that totally caters to your personal circumstances to give you the most complete and accurate return, and gets you the maximum tax refund.