Gift and Estate Tax
What is Estate Tax?
Estate tax is a tax on a person’s right to transfer property of everything they own or have certain interests in at the time of their death.
When someone dies, everything they own or had a financial interest in at the time of death becomes the property of their estate. This can include everything from stocks and buildings to jewelry, cars, and artwork. During this time, the executor of the estate must file a federal estate tax return within nine months after the decedent’s date of death. If more time is needed, the estate’s representative may request an extension of time to file the return.
The amount owed is based on the value of the taxable estate which is determined by deducting any transfers to the surviving spouse, debts, funeral costs, and other costs associated with managing the estate.
What is Gift Tax?
Gift tax is a tax on the transfer by gift of any type of property by one person to another while receiving nothing in return.
Gift taxes only apply to large gifts (money, property, and other assets) made by a person while they are alive. The person may give as many gifts as they like, however, they must pay taxes on those gifts when the accumulative amount of gifts during their lifetime exceeds the lifetime estate and gift exemption. For example, if a mother gives her daughter a gift with a value of more than $10,000, the mother’s lifetime estate and gift exemption is reduced by the gift’s value of $10,000 or more.
JTS Can Help With Gift and Estate Tax Planning
Depending on the situation, Gift and Estate Tax can be difficult to grasp as there are many things to consider. That’s when it’s helpful to hire a CPA that understands how Gift Tax and Estate Tax provisions apply. JTS Associates CPAs are here to help. Contact us at (516) 877-5900.
