FLORIDA ESTATE PLANNING AND PROBATE LAW BLOG: 2017 federal estate tax exemption

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MINNESOTA RAISES ITS ESTATE TAX EXEMPTION FOR 2017 AND BEYOND

♠ Posted by Marc J. Soss in 2017 federal estate tax exemption,florida estate plan,florida estate planning,inheritance tax,Minnesota 2017 estate tax reform,retirement planning

The State of Minnesota's recent budget brings it closer to joining the thirty-two (32) states that do not impose a state inheritance or estate tax in addition to the federal estate tax. The state budget increases the estate tax exemption amount to $2.1 million for 2017 (from the current $1.8 million level). The change is retroactive to January 1, 2017, and includes incremental increases in the exemption amount to $2.4 million in 2018, $2.7 million in 2019, and $3 million by 2020. The Minnesota estate tax doesn’t have a portability provision and tops out at 16%.

DISTRICT OF COLUMBIA INCREASES ITS ESTATE TAX EXEMPTION

♠ Posted by Marc J. Soss in 2017 Federal Estate Tax,2017 federal estate tax exemption,DC estate tax,ESTATE TAX ELIMINATION,estate tax reform,florida estate planning

Tax reform dating back to 2014 has resulted in an increase in the District of Columbia's 2017 estate tax exemption amount to $2 million. In 2018 the exemption amount is anticipated to be equal to the 2017 federal exemption amount of $5.49 million. Currently, eighteen (18) states and the District of Columbia impose an estate or inheritance tax—separate from the federal estate tax. However, neighboring states have been repeal their estate and inheritance tax by raising the exemption amount to the federal level. For example, Maryland increased its 2018 exemption to $4 million in 2018, and the federal exemption amount in 2019. The Commonwealth of Virginia does not impose an estate tax on decedent estates.

WHAT WILL YOUR ESTATE PAY IN FEDERAL AND STATES ESTATE TAXES?

♠ Posted by Marc J. Soss in 2017 Federal Estate Tax,2017 federal estate tax exemption,florida probate lawyer,NON-TAX STATE,state estate tax exemption

We live in an ever-changing federal income and estate tax environment. On January 1, 2017, the federal estate tax exemption increased to $5.49 million per individual. That amount excludes over ninety-five (95%) percent of all decedent estates from payment of any federal estate tax. In addition, thirty (30) U.S. states have no estate or inheritance taxes while twenty (20) states and the District of Columbia currently impose an estate (14 states) or inheritance (6 states) tax, or both. As a result, your estate could be exempt from the federal estate tax but subject to a large state estate tax.

IRS NOTICE 2017-12 - FEDERAL ESTATE TAX RETURN CLOSING LETTER GUIDANCE

♠ Posted by Marc J. Soss in 2017 Federal Estate Tax,2017 federal estate tax exemption,2017 federal gift tax exemption,FEDERAL ESTATE TAX RETURN CLOSING LETTER GUIDANCE,RS NOTICE 2017-12

For years, probate practitioners relied upon a Federal Estate Tax Closing Letter (Closing Letter) as evidence that the IRS has accepted a Federal Estate Tax Return (Form 706) as filed and that the federal tax liabilities of the estate were satisfied. Upon receipt, the Closing Letter provided the estate administrator (Personal Representative, Executor, etc..) with an assurance to proceed with closing out the estate administration process. In many situations, a Closing Letter was required to satisfy state law probate proceedings. Except in extreme circumstances, such as fraud, substantial error by the Internal Revenue Service (IRS) or when a failure to reopen would be a serious administrative omission, the IRS will not reopen or reexamine an estate tax return when a closing letter has been issued. Effective on June 1, 2015, the IRS changed its policy and ceased issuing a Closing Letter to the taxpayer’s representative. Instead, the taxpayer’s representative will receive a closing letter only upon affirmative request. To avoid the confusion created by this policy change, the IRS recently issued Notice 2017-12, as guidance on methods to confirm that the IRS has closed its examination of an estate tax return. Notice 2017-12 officially confirms an account transcript issued by the IRS is a valid substitute for an estate tax closing letter, so long as the transcript bears the transaction code of 421 (that Form 706 has been accepted as filed and an examination has been concluded). An account transcript can be obtained online through the IRS’s Transcript Delivery Service or by fax or mail through filing Form 4506-T. Account transcripts will only be issued to an estate representative when a properly executed Form 2848 Power of Attorney or Form 8821 Tax Information Authorization is already on file. Alternatively, a Closing Letter can be obtained by calling (866) 699-4083 and providing the IRS the following information: (i) the name of the decedent; (ii) the decedent’s social security number; and (iii) the date of death. The closing letter will then be issued to the estate administrator at the address of record.

WHAT TRUMP'S FEDERAL INCOME TAX PLAN MAY LOOK LIKE

♠ Posted by Marc J. Soss in 2017 federal estate tax exemption,ESTATE TAX ELIMINATION,Federal Estate Tax,federal income tax return,Federal tax law changes,florida estate planning,Trump Tax Plan

Most individuals expect significant changes to the US Tax Code once President (elect) Trump takes office. High on his agenda are the following: INDIVIDUALS: Cut the number of individual income tax brackets (from 6 to 3) and bring income tax rates down to 12%, 25% and 33% - that would benefit everyone who works across the board. Elimination of the 3.8% Obamacare tax - if Obama Care goes away this extra tax on the wealthy will go away with it. Tax carried interest gains as ordinary income. Retain 20% capital gains rate for non-corporations. Increase the standard deduction for joint filers to $30,000 from $12,600, while eliminating personal exemptions - basically a wash. $200,000 cap for itemized deductions for joint filers - this will only impact high earners. Most importantly, repeal of the estate tax (a double tax for those who leave an inheritance to their children, etc..). This would be offset by no step-up in basis at death, except on first $10 million of assets. CORPORATIONS | BUSINESS: Lower the business tax rate for corporations and small businesses alike to 15%, but with elimination of many deductions - we have one of the highest corporate tax rates in the world. Ever wonder why so many companies leave the US for foreign shores. Elimination of corporate alternative minimum tax - to bring american business back home. A 10% one-time tax on repatriation of corporate profits held offshore - could raise trillions of dollars. Allow U.S. manufacturers to elect to expense capital investment and lose the deductibility of corporate interest expense.

2017 FEDERAL INCOME TAX FIGURES

♠ Posted by Marc J. Soss in 2017 federal estate tax exemption,2017 federal gift tax exemption,2017 Federal Income Tax figures,estate taxes,federal income tax return,Federal tax law changes,florida tax lawyer

Standard deduction - married filing jointly = $12,700 Standard deduction - single persons = $6,350 Standard deduction for a dependent = $1,050 Overall Limitation on itemized deductions (Section 68(b)) = $313,800 (Married person) Personal exemption = $4,050 Unified credit against estate tax and gift tax = $5,490,000 Gift tax annual exclusion = $14,000 (no change) Gift tax annual exclusion for gifts to noncitizen spouse = $149,000

IMPORTANT 2017 FEDERAL TAX AND EXEMPTION AMOUNTS

♠ Posted by Marc J. Soss in 2017 federal estate tax exemption,2017 federal gift tax exemption,2017 retirement account,estate plan,Estate planning attorney,ESTATE TAX ELIMINATION,florida estate planning

Federal Estate & Gift Tax: The Federal estate tax exemption amount will be $5,490,000 in 2017. The annual gift exclusion amount will remain at $14,000 Qualified Plans for 2017: The limit on the maximum amount of elective contributions that a person may make to a §401(k) plan, a §403(b) tax-sheltered annuity, or a §457(b) eligible deferred compensation plan remains unchanged at $18,000. The limit on “catch-up contributions” to a §401(k) plan, a §403(b) tax-sheltered annuity, or a §457(b) eligible deferred compensation plan for persons age 50 and older remains unchanged at $6,000. The dollar limit on the maximum permissible allocation under a defined contribution plan is increased from $53,000 to $54,000. The maximum annual benefit under a defined benefit plan is increased from $210,000 to $215,000. The maximum amount of annual compensation that may be taken into account on behalf of any participant under a qualified plan will go from $265,000 to $270,000. The dollar amount used to identify “highly compensated employees” remains unchanged at $120,000. Social Security Tax: The Department of Health and Human Services has set the maximum taxable wages for the OASDI portion of the social security tax at $127,200 for 2017, which is an increase from the 2016 limit of $118,500.