FLORIDA ESTATE PLANNING AND PROBATE LAW BLOG: 2017 Federal Estate Tax

Showing posts with label 2017 Federal Estate Tax. Show all posts

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.

THE 2017 FEDERAL ESTATE AND GIFT TAX LIMITS

♠ Posted by Marc J. Soss in 2017 Federal Estate Tax,2017 federal gift tax exemption,florida estate planning,Sarasota estate planning,Sarasota retirement planning,Sarasota Tax Attorney

The IRS has published Rev. Proc. 2016-55 and the federal estate and gift tax limits for 2017. For 2017, the credit against federal estate tax (federal exclusion amount) is increased to $5,490,000. For an individual who passes away during 2017, no federal estate tax will be imposed if his or her gross estate is less than $5,490,000. For a married couple (including a same-sex couple) the federal exclusion amount is $10,980,000. For 2017, the federal gift tax limit of $14,000 remains in place. This allows an individual to gift up to $14,000 in 2017, to any individual without being required to report the gift to the IRS or utilizing a portion of their lifetime gift tax exemption (also $5,490,000). Spouses can make a joint gift of $28,000 without being required to report the gift to the IRS or utilizing a portion of their lifetime gift tax exemption. The federal gift tax limit does not apply to gifts between spouses. However, if the gift is made to a spouse who is not a United States citizen, the first $149,000 of gifts are not included in the total amount of taxable gifts that must be reported to the IRS. In addition, the federal gift tax limitation does not apply to qualified gifts paid on behalf of another individual directly to a college or university or for medical purposes.

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.

STATE ESTATES AND INHERITANCE TAXES IN 2017

♠ Posted by Marc J. Soss in 2017 Federal Estate Tax,asset protection planning,estate planning,ESTATE TAX ELIMINATION,inheritance tax,retirement planning,Sarasota retirement planning,state death taxes,state estate tax exemption

For years it has been discussed that for estate tax purposes it was better to die a resident of certain states than others. The following is an updated list, as of January 1, 2017, of the states which impose a "death or inheritance tax" on its residents and those who follow the Federal Estate Tax Exemption amount. Good States in Which to Die a Resident: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming. Bad States in Which to Die a Resident: Connecticut ($2,000,000), Delaware ($5,490,000), District of Columbia ($2,000,000), Hawaii ($5,490,000), Illinois ($4,000,000), Iowa (inheritance tax on transfers to others than lineal ascendants and descendants), Kentucky (separate inheritance tax), Maine (estate tax and no portability), Maryland ($3,000,000), Massachusetts ($1,000,000), Minnesota ($1,800,000), Nebraska (County Inheritance Tax), New Jersey ($2,000,000), New York ($4,187,500 for April 1, 2016 through March 31, 2017 and then $5,250,000 for April 1, 2017 through December 31, 2018), Oregon ($1,000,000), Pennsylvania (Inheritance Tax), Rhode Island ($1,500,000), Vermont ($2,750,000), and Washington ($2,129,000).