Estate Tax: What It Is And How It Is Filed
According to the Internal Revenue Service (IRS), an Estate Tax
is a tax that is imposed on your right to transfer your property
and belongings after your death The individual who is in charge
of handing and filing an Estate Tax return is often the estate
representative An estate representative can be a family
attorney or a family member who was declared the executor of an
estate in a will When dealing with an Estate Tax, there are
number of things that an individual or family must do when
preparing to deal with the Internal Revenue Service (IRS)
There are certain restrictions for estates that are subject to
the Estate Tax Each year tax laws are updated or completely
changed; therefore, estate representatives or family members are
encouraged to review the new Estate Tax laws At the current
time, the majority of estates are not subject to an Estate Tax
if they are valued at less than one million fifty thousand
dollars The Estate Tax value is expected to increase up to two
million dollars for the 2006 year In addition to meeting a
certain estate value, it is also likely that the majority of
properties that are jointly owned will not be taxed if at least
one property owner is still living
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An Estate Tax return is due to be submitted to the Internal
Revenue Service (IRS) nine months after the estate owner passed
away As with regular tax returns, it is possible for estate
representatives or family members to obtain a deadline
extension If tax is owed on the estate, it still needs to be
paid before the nine months arrives even if an Estate Tax return
deadline was granted Not paying the estimated amount of estate
taxes due can result in late fees or additional penalties
The Internal Revenue Service (IRS) will determine the amount of
Estate Tax owed by taking the fair market value of all property
items that were previously owned by the estate owner before he
or she passed away Fair market value takes into account when an
item was purchased and exactly how much it is worth today When
all of those items are added up the total is referred to as the
Gross Estate As with traditional tax returns, estate taxes are
allowed tax credits and tax deductions When all of these items
are computed together the amount of tax owed will be determined
When an Estate Tax return is being filed with the Internal
Revenue Service (IRS) there are a number of other important
documents that must be sent along with the return These items
include a copy of a death certificate, copies of property
appraisals, copies of litigation documents that may apply to the
estate property, and a copy of the deceased’s will As
previously mentioned, an Estate Tax return can be filed by a
lawyer, an estate representative, or a family member
Individuals can acquire the Form 706: United States Estate (and
Generation – Skipping Transfer) Tax Return by contacting the
Internal Revenue Service (IRS) or by downloading the form online
Only a small percentage of Americans are required to file for an
Estate Tax return; however, that does not mean that taxpayers do
not need to know and understand what an Estate Tax is A
taxpayer may not own a high valued property; however, that does
not mean that they cannot inherit one or be named an estate
representative by a friend or family member who has passed on
Tags | belongings, deadline, estate, executor, extension, member, property, result, return, returns, tax
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