Contact
Us:
1800 Chapel Avenue W. Suite 128,
Cherry Hill, J 08002
Phone:
(856) 665-2121
Email:
ron@taxesq.com
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Tax Attorney
&
Estate Planning Lawyer
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PROBATE
Estate
Administration
Tax Responsibilities
The Executor and Administrator of an estate has the responsibility of
filing Federal and State Income
Tax, Estate
Tax and Inheritance
Tax returns.
- If
an
estate must file income tax or estate tax returns, a federal employer
identification number (EIN) must be obtained from the IRS.
- The
Executor should open an estate checking account. The account is opened
with funds transferred from the decedent's accounts. The bank will
require the estate's EIN. Place deposits from income earned by the
estate into the Estate Checking Account. It is also used to to
pay expenses, including outstanding bills, funeral and medical
expenses, preliminary distributions, and state and federal taxes.
- Federal and state income tax returns need to
be filed;
- Federal and state estate tax returns
will
have to be filed.
Income Tax
At death, the decedent's estate may take over ownership of some or all
of the decedent's assets. If so, the estate will be taxed on its income
under complicated IRS guidelines applicable to trusts. This
is the
income tax
for the estate, not
the final income taxes of the decedent.
These are both different than federal estate tax.
Small estates (with gross income under $600) aren't required to file
income tax returns. If you are in charge of an estate that must file,
call Ronald J. Cappuccio, J.D., LL.M. (Tax) at (856) 665-2121 with this
onerous chore because the tax law is very complex.
Estate Tax
The federal estate tax return is filed on Form
706.
Form
706 is due nine months after death, but the deadline can be extended up
to six months. Remember:
While life insurance proceeds are generally free of any income tax,
they are usually included
in the decedent's estate for estate tax purposes -- even if the money
goes directly to policy beneficiaries. In fact, life insurance proceeds
are the most common cause of unexpected estate tax bills. One other
very important point: assets inherited by a surviving spouse are not
included in the decedent's estate, as long as the surviving spouse is a
U.S. citizen. This is called the unlimited marital deduction privilege
and it's the most common reason why many large estates don't
owe any federal estate tax.
If you are the executor of a substantial estate, preparing the Federal
and Estate Tax Return is one of your most important duties.
The Estate Tax laws are in a constant state of change and can be
confusing to most executors.
If you are in charge of an estate that must file an Estate Tax Return,
call Ronald J. Cappuccio, J.D., LL.M. (Tax) at (856) 665-2121 .
Inheritance Tax
In addition to a tax on the Estate, many States have a separate tax
based upon the relationship of the beneficiary to the decedent. For
example, a transfer to a child may be exempt from Inheritance Tax
when the same transfer to a niece or nephew could be heavily
taxed.
Reducing Tax
Even though the decedent is dead, how the estate is
administered, and the use of disclaimers can help lower taxes.
Tax and Estate attorneys call this "Post Mortem Estate
Planning." The earlier the tax attorney is brought into the
process, the greater the help that can be given, Don't wait!
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