Estate Tax - Estate Tax Filing Requirements
Estate Tax Filing Requirements
The executor of any gross estate valued at more than $5,340,000 (for tax year 2014) must file a Form 706 (U.S. Estate Tax Return). The return should still be filed even if the applicable exclusions and deductions bring the taxable estate below the $5 million threshold. For 2014, the maximum estate tax rate is 40%.
The estate tax return is due nine months after the date of death, unless an extension request is filed.
The Alternate Evaluation Date (six months after death) can be selected if two conditions are met:
1) Gross estate must be worth less than the date of death value
2)Tax liability must be less than the tax liability due using date of death calculation The Gross Estate
The gross estate is the total fair market value (FMV) of all property for which the deceased has an interest at his or her death. The gross estate includes all property BEFORE subtracting for deductions, debts, credits and administrative expenses.
The following items are included as part of the gross estate:
- Physical property (autos, boats, houses, clothes, furniture, pets, etc…)
- Cash and securities
- Investment accounts (savings, CD's, brokerage, etc…)
- Retirement accounts (IRA's, annuities, 401k, pensions, etc…)
- Life insurance proceeds (for policies owned by decedent)
- Gift tax on gifts made within three years of death
- Life insurance with ownership change within three years of death
- Certain gifts made within three years of death
- One-half of jointly-owned property with spouse
- Assets in joint tenancy with non-spouse (subject to consideration test)
Transfers made within three years of death for the following WILL be included in the gross estate of the decedent:
- Transfer of ownership of life insurance
- Gift taxes paid on gifts
The following items are excluded from the gross estate of a decedent:
- Property owned by the spouse or other individuals
- Completed lifetime gifts
- Property for which the decedent had no control
- One-half of jointly owned property with a spouse
- Contribution amount by non-spouse's for jointly-owned assets "consideration test"
- Life insurance policies where the decedent has no ownership (after three-year period)
"Consideration Test or Contribution Rule"
The gross estate will include the entire amount of jointly-owned property (non-spouse), reduced only by the amount that can be clearly identified by the surviving non-spouse joint owner(s) as their contribution to the property.
Certain deductions are allowed from the gross estate in order to determine the adjusted gross estate. Such deductions to the gross estate include the following:
- Funeral expenses
- Casualty losses
- Court costs
- Debts against the estate
- Administrative expenses (fees for an attorney, accountant, appraisals, executor and asset dispositions)
Financial AdvisorsInheritance is a double-edged sword, as leaving money can create estate tax burdens. Opting for a life insurance plan can help mitigate those burdens.
RetirementEstate planning can be unpleasant, but in order to get the full benefit of what you've inherited, it’s important to be prepared for the related taxes.
Retirementby Cathy Pareto, CFP®, AIF® (Contact Author | Biography) Uses of Life InsuranceLife insurance is present in almost every estate plan and serves as a source of support, education-expense ...
TaxesInheritance taxes can be tricky. Most people have to deal with them at a very inconvenient time. It's better to learn the laws now so you're ready later.
TaxesThe tax implications of an inheritance can be complex. Here's what beneficiaries need to know.
Options & FuturesWith some preparation, you can save your heirs from paying a hefty estate tax. Here are some tips.
Personal FinanceChanges to federal legislation will affect how your assets are treated once you're gone - be prepared.
RetirementBy Steven Merkel What Is an Estate and What Planning Is Involved?It's important for you to understand what the word "estate" means so that you do not underestimate the broad scope of the term. ...
RetirementThe process of planning your estate takes careful consideration. Skip any of these important steps, and your estate could be mishandled.
TaxesThe lifetime maximum for gift taxes is $5.12 million. However, it could drop to $1 million. Here's what that will mean.
A person who is no longer living. Just as a taxpayer's possessions ...
The net worth of the deceased's estate after deducting the cost ...
A tax levied on an heir's inherited portion of an estate if the ...
Taxes imposed by the federal and/or state government on someone's ...
The final tax return filed for an individual in the year of that ...
A tax imposed by state authorities based on the estate tax credit ...
Estate planning involves making plans for the transfer of your estate after death. Your estate is all the property that you ... Read Answer >>
$25,000.00 was paid to the beneficiary of a life insurance policy. What would the estate tax be and do you have to pay an ... Read Answer >>
The costs of estate planning can be significant. Are any of these expenses deductible to the taxpayer or are they merely ... Read Answer >>
Learn how life insurance proceeds are generally not taxable to the beneficiary, but understand the unique situations in which ... Read Answer >>
A trust is an arrangement in which an individual or entity controls property or funds on behalf of someone else without actually ... Read Answer >>
Decrease the amount of taxable income on your income-producing real estate by depreciating the asset on your federal income ... Read Answer >>