Estate Tax Filing

Estate Tax

When you die, the money and property you own (your estate) may be subject to federal estate tax if the estate is worth more than the applicable exclusion amount.

The estate tax in the United States is a tax imposed on the transfer of the "taxable estate" of a deceased person, whether such property is transferred by will or according to the state laws of intestacy

It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to IRS Form 706).

The current fair market value of these items is used. The total of all of these items is your "Gross Estate." The gross estate may consist of cash, securities, real estate, insurance, trusts, annuities, business interests and other assets.

Estate Tax is part of the Unified Gift and Estate Tax system in the United States.

Gift Tax, another part of the system, imposes a tax on transfers of property during a person's life; the gift tax prevents avoidance of the estate tax should a person want to give away their estate just before dying.

Many states also impose an estate tax, with the state version called either an estate tax or an inheritance tax.

If an asset is left to a spouse or a charitable organization, the tax usually does not apply.

Gifts that aren't taxable include tuition, medical expenses, gifts to your spouse, gifts to a political organization and charitable donations.

If you gave someone gifts valued more than $12,000, you must report the total gift to the IRS and may have to pay tax on the gifts. If you're Married Filing Jointly, the tax-free amount doubles to $24,000. If you or your spouse make a gift to a third party, the gift can be considered as made half by you and half by your spouse (gift splitting). The person who receives your gift doesn't have to report it to the IRS or pay gift or income tax on its value. 

Reduced Tax on Appreciated Securities
If you give your child appreciated securities (such as stock or mutual fund shares), the tax bill on the increase in value is passed on to the child along with the gift.