If you have seen or read the news lately, you probably are wondering what the big deal is with the Estate Tax or you may be wondering what the Estate tax is. As a CPA in Reno, Nevada, I want to take a moment to talk about the Estate Tax. What is it? Why it is making the news?
On the IRS website, the Estate Tax is defined as “a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death. The fair market value of these items is used. The total of all of these items is your ‘Gross Estate.’ The includable property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.” My job as a CPA in Reno, Nevada is to help you calculate all of these things.
This may seem like a lot of work, but do not start worrying yet. According to the IRS, “most relatively simple estates do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $1,500,000 in 2004 – 2005; $2,000,000 in 2006 – 2008; and $3,500,000 effective for decedents dying on or after January 1, 2009.”
The reason why the Estate Tax is in the news is that this year, is because the tax expired. I had one client come in and ask what he was supposed to do because his father passed away on January 1st at 8:00 A.M. I said, if he would have died 9 hours earlier, we would be done. I would have told him exactly what he would have to do. At that point, all I could tell him was that there is no state tax and that we did not have to do anything. Unfortunately, the proposal in Congress right now is to enact a retroactive estate tax at the beginning of the year.
The proposal for a retroactive tax is what is controversial. As a CPA in Reno, Nevada, all I can do is wait and see what Congress decides and then take the appropriate actions from there.
Visit the IRS’s website for more information about the estate tax, instructions for dealing with this tax and frequently asked questions.
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