How Much Are Estates TaxedTuesday, February 1st, 2022, 9:01 am
When it comes to estate tax, it is good to mention that an estate tax almost no longer exists in the US. This is due to the fact that the amount of the estate will need to be a certain amount before it will be required to pay any tax. In 2021, the amount that an estate needed to be was more than $11.7 million. Now only that, but a provision exists that permits a spouse to make the exemption double so that the tax bill will be nonexistent. Today, very few states may tax an inheritance or estate. In fact, only 5 states implement a tax for estates. The good thing is that those states will not even tax an estate that is bequeathed to a minor or spouse.
Certain Circumstances for Estate Taxes
Estates can be seen as income tax, so they must be filed by the estate. Taxes may also be owed if an estate is currently earning dividends or interest. When any failure to pay taxes occurs, then the tax bill may be given to the beneficiaries. If any taxes are due, then they may be paid by the estate or the estate may have each heir pay their equal share. Sometimes, when the taxes are paid by the estate, their heir is able to save some money in the process. This will be due to a higher tax bracket of the estate, which will cause it to pay more than the individual will.
Why the Estate Tax Does Not Exist in Most States
With a lot of controversy behind the estate tax, many have considered it to be a tax for the dead.
Besides that, this tax was considered to be unjust for those families who had property which made most of the assets. This would force the sale of the property in order for the estate tax to be paid.
Having the Tax Limited
In 2010, there was an exemption put in place which exempts an amount of at least $5 million. Today, that amount is at $11.7 million.
How to Avoid the Estate Tax
It is thought that more than 2,500 individuals currently owe taxes on the estates they inherit. This causes many to have an accountant research ways that can help them to avoid the estate tax. There are two methods that can help an estate to avoid taxation and they include giving away some of the proceeds ahead of time or opening an irrevocable life insurance trust account.
Nobody likes to pay taxes when they shouldn´t have to. This includes the estate they have inherited. However, if your inheritance is subject to taxes, then you should get ahold of a qualified attorney who can answer all of your answers. At Kanzerlaw, we´ll get those answers in your hands as fast as you ask them!