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Estate Tax

How much is excludable from my Estate before I have to pay Federal Estate or Gift Taxes?

Asked Wednesday, October 25, 2000 by an anonymous user
For the year 2013, 5,250,000 Million. State tax thresholds vary per state
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Estate Tax

Unified Tax Credit

Asked Wednesday, October 25, 2000 by an anonymous user
Every estate gets a Federal Unified Tax Credit for the amount of tax that would be levied. In year 2013 the Federal Unified Tax Credit is $2,045,800 yielding a exclusion amount of $5,250,000 Million.
That is the limit that you can leave your heirs free of federal estate taxes. It is also known as the exemption equivalent amount.
The unified tax credit is cumulative. It includes the taxes due on taxable gifts that you have made over the course of your life (taxes on these gifts are usually not due until you die). Non-taxable gifts of up to $14,000 per person, per year are not counted against the federal unified tax credit.
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Estate Tax

Estate taxes - overview

Asked Wednesday, October 25, 2000 by an anonymous user
Estate taxes are taxes based on the value of the estate you leave when you die. Estates valued at more than $5 million are subject to the federal estate tax. Some states use lower limits and other states charge no estate taxes at all. Any estate taxes that are due are usually paid for by the estate itself. This is different from inheritance taxes. They are state taxes that your heirs may be required to pay on the property they inherit.
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Estate Tax

Can I minimize my future Estate Tax?

Asked Wednesday, October 25, 2000 by an anonymous user
Estate taxes can take a big bite out of what you would like to leave your heirs. Federal Estate taxes apply only to estates larger than $5,250,000 for the years 2013.
There are several strategies you can pursue to reduce or eliminate the tax bite. Speak to your local CPA or attorney about these strategies.
They may mention to you to consider making gifts. You can give up to $14,000 a year to as many people as you like, tax free. Together with your spouse, you can give up to $28,000 to each person. Also consider giving your life insurance policy to your wife, your child or put it in an irrevocable trust provided the assignment takes place more than 3 years before death. To keep the policy out of your estate, you cannot continue to pay the premiums.
The new owner has to pay them. Another strategy is to get married. No estate tax is levied on property given to a spouse. Of course, whatever is left (over $5,250,000) will be taxed in your spouse's estate when he or she dies.
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Estate Tax

Estate valuation

Asked Wednesday, October 25, 2000 by an anonymous user
The first step in determining the value of your estate is to add up the value of everything you own and then subtract it from the estate value, the expenses of settling the estate and making any non-taxable bequests. No federal estate taxes are assessed on estates valued at less than $5 million.
Included in your estate is your home and any rental property you may own, securities and other investments, retirement funds (401k, IRA's)you have saved and all your personal possessions.
Pending federal and state income tax refunds are also included. Many such items will automatically pass to your spouse and not be included in your estate if the property is jointly owned.
In addition, the size of your estate will be reduced by the money you owe, such as a mortgage on your home, burial expenses, the cost of settling the estate and other items.
Assets left to charity will also reduce the size of your estate.
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Estate Tax

Federal Estate Tax Return due date

Asked Wednesday, October 25, 2000 by an anonymous user
The IRS expects estate taxes to be paid within nine months after the date of decedent's death unless one exception applies.
The exception involves a decedent who owned a business that accounted for more than 35% of the total estate. In that instance, a formula established by the IRS may allow estate taxes to be paid over several years. Speak to your local CPA about filing Form 706.
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Estate Tax

Estate Tax Return identification number

Asked Wednesday, October 25, 2000 by an anonymous user
An estate is a separate entity from the deceased and from the executor who carries out the will. The estate must have a separate federal identification number. The estate will be assigned its own federal ID number after the executor completes IRS Form SS-4.
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Estate Tax

What is the estate tax threshold for my inherited Family Owned Small Business ?

Asked Wednesday, October 25, 2000 by an anonymous user
Starting in 2013, a taxpayer can leave a small business worth up to $675,000 to his or her heirs without triggering any federal estate taxes. For tax purposes, the IRS defines a family-owned business as any trade or business that is held at least 50% by one family, 75% by two families or 90% by three families. However, the decedent's family must have at least a 30% ownership stake. To qualify for the $675,000 threshold, the aggregate value of the decedent's family-owned business interests that are passed to heirs must exceed 50 percent of the adjusted gross estate. This requirement is called the 50 percent liquidity test. To find out if you are eligible, speak to your local CPA or attorney.
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Estate Tax

Estate tax - Unified Credit

Asked Wednesday, September 27, 2000 by an anonymous user
For decedents and gifts made in the current year, a unified credit is allowed which is the equivalent of a $5,120,000 dollar exemption is subtracted from the tax calculated on the taxable estate.
For 2012 the $5 Million exemption may be increased for inflation.
New for 2011 and 2012 is a concept named portability which allows a surviving spouse's estate to use any portion of the exemption amount not used by the other spouse’s estate.
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