• Comstock/Comstock/Getty Images
  
  Tennessee has two death taxes, an inheritance tax and an estate tax. According to the Tennessee Department of Revenue, the purpose of the Tennessee estate tax is to make sure the state receives, along with the inheritance tax, an amount equal to the "State Death Tax Credit" allowed by the federal government on the federal estate tax return, Form 706.
  
  

Resident Tax

• If the deceased person was a Tennessee resident, the law allows a $1,000,000 exemption before state taxes are due. If the gross estate is greater than $1,000,000, an inheritance tax return must be filed, along with the tax due, nine months after the date of death. When an estate is opened in probate, the clerk files a Notice to Commissioner. No closing receipt is issued by the Department of Revenue until the tax return is filed.
  
  

Non-Resident Tax

• An inheritance tax must also be paid on non-resident estates located in Tennessee. According to the instructions for the Tennessee inheritance tax return, the exemption for non-residents varies depending on the ratio that the gross value of the Tennessee estate has to the value of all the property that would have been included in the estate if the deceased person had been a Tennessee resident.
  
  

Responsibility

• The executor, administrator or personal representative is responsible for filing the inheritance tax return. If there is no executor or administrator, the person in possession of estate assets is responsible for verifying and signing the return.
  
  

Deductions

• Tennessee allows the following deductions when filing an inheritance tax return: funeral expenses, attorney's fees, personal representative's fees, lawful debts against the estate, real property taxes, mortgages, federal income taxes, appraisal fees and court costs.
  
  

Estate Tax

• The Department of Revenue posts links to the schedules and other forms necessary to comply with estate taxes on the Forms and Publications page of its website. An instruction booklet is also included.
  
  

Federal Tax

• The federal exemption for estates was $3,500,000 in 2009. Congress repealed the estate tax for 2010, but the temporary repeal expires on Dec. 31, 2010, and the tax rate will go back to the 2001 figure of $1,000,000 unless a new law is passed. Estate taxes are calculated only on the portion of the estate that exceeds that figure. According to the American Bar Association Guide to Wills and Estates, the entire estate, no matter how much it's worth, can be passed to a spouse without owing any federal estate tax at all. Assets subject to tax include the family home, life insurance, household furnishings and benefits under employee benefit plans. Federal estate taxes range from 37 percent to 50 percent of the estate's value. Beneficiaries don't pay federal tax on money they receive from an estate, but they do have to pay income tax on any earnings after they invest it.