John D. Teter Law Offices

REQUEST A CONSULTATION TODAY

408-866-1810

1361 South Winchester Boulevard, Suite 113
San Jose, CA 95128
Subscribe to this list via RSS Blog posts tagged in Estate Tax

San Jose, CA gift tax attorney marital deductionMany people have strong feelings about the inheritance they plan to leave to loved ones when they pass away. After working hard to acquire assets throughout your life, you do not want the value of these assets to be reduced through estate tax or gift tax. If this is something you are concerned about, you may be interested to learn about an estate preservation tool called the unlimited marital deduction.

The Unlimited Marital Deduction Allows Married Couples to Be Treated as One Economic Entity

The unlimited marital deduction lets an individual leave money or property to his or her spouse without incurring immediate federal taxes or penalties. The value of the property that you can transfer is unlimited, and this transfer can take place during your lifetime or upon your death. In 1982, the unlimited marital deduction took effect, eliminating the federal gift and estate tax for property transfers involving spouses. This provision changed the law so that married spouses are now treated as one financial unit when it comes to property transfers.

The Marital Deduction Delays Estate Tax Liability

Spouses have the opportunity to transfer all of their property to a surviving spouse if they choose to do so, and they can do this without incurring federal gift tax or estate tax liability. However, this property is still included in the surviving spouse’s taxable estate, and it is therefore subject to taxation when the second spouse passes away. The unlimited marital deduction effectively delays the estate tax liability until the second spouse in a marriage passes away. It should be noted that in order to take advantage of the unlimited marital deduction, the spouse receiving the property transfer must be a U.S. citizen. However, other estate planning instruments such as a qualified domestic trust may help those who are not yet U.S. citizens gain the marital deduction and reduce their estate taxes.

...

San Jose, CA estate tax lawyerThere are several ways the IRS will be involved in the estate of someone who has died (known as a “decedent”). The IRS is notorious for enforcing payment of the taxes it claims it is due, including in situations involving a deceased person’s estate. 

Tax issues will be important to a deceased person’s personal representative, executor, successor trustee, and heirs, because the estate must pay all taxes due before the estate’s assets can be distributed to the beneficiaries. The IRS can even audit the tax returns of a dead person.

The estate will have to pay any income taxes due for the year of the person’s death (as well as for any year that the decedent did not file). Just like a taxpayer filing his or her income taxes each year, the estate administrator will file a Form 1040 for the estate. Depending on how organized the estate is, the estate administrator may need to file a Request for Transcript of Tax Return in order to get needed documents related to the deceased person’s income and taxes.

...

gift tax, transfer taxes, San Jose tax attorney, estate tax, gift tax returnIn the United States, we are all too aware of the taxes that affect our everyday lives, such as sales tax and income tax. However, there are additional taxes that apply in special situations, including when someone leaves assets to his or her heirs after their death and when a person gives someone a large gift of money or property. These taxes are known as transfer taxes, and people should be aware of the tax laws that apply in these situations.

Estate Tax

When a person dies, taxes may apply to the transfer of his or her property to his or her heirs. A complete accounting of one’s assets will be made, including cash, real estate, investments, and business interests, using the fair market value of these items. The total value of this property is known as the Gross Estate. Deductions from this amount may apply for debts, expenses related to estate administration, property left to charities, and property left to a surviving spouse.

...

Taxpayer complaints led the IRS to abandon the practice in 2006 but now it is set to return: using private collectors to pursue overdue federal tax payments. Subcontracting with private collection firms was approved by President Obama when he signed the recent federal highway bill—also known as Fixing America's Surface Transportation (FAST) Act, HR 22—on December 4, 2015. According to multiple media sources, including the Hill, the president signed the legislation with only hours remaining before federal funding for highways was set to expire. FAST should provide funding for the nation's highways and other infrastructure for the next five years without increasing gasoline taxes. The law also has substantial implications for taxpayers who owe a significant amount of money to the IRS. In addition to authorizing the use of private collection agencies for some tax collections, FAST also includes a new penalty for taxpayers who have "serious" tax debt that is delinquent.

As a result of the new law, taxpayers who owe more than $50,000 in unpaid federal taxes will now have their applications for passports or passport renewals denied. Supporters of this approach believe this new penalty may be an incentive for payment and predict it will garner nearly $400 million dollars in tax revenue over the next 10 years.

Tagged in: Estate Tax

Digital currency may be a misnomer because, according the United States Government, it is property rather than currency. Regardless of what it is called, digital currency does have value and the owner of the currency must report digital currency transactions on his/her income tax returns or face penalties.

During an American Bar Association webcast that was held on March 25, 2015, government sources said they will aggressively pursue taxpayers who use virtual currency for illegal activities including money laundering, tax evasion and a host of other crimes. The webcast affirmed what the IRS stated in a press release published in March of last year: "IRS Virtual Currency Guidance : Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply."

Bitcoin, the most popular digital currency, has approximately $3.9 billion in circulation worldwide. Each holder of Bitcoin currency obligated to pay US income tax must report the fair market value to the IRS. According to the IRS press release, other requirements include

...
Tagged in: Estate Tax
BBB ABA State bar of california SCCBA MH 2016
Back to Top