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Estate and estate taxes?

To start off, we should know that similar to the concept of gross income on a certain personal income tax return, calculating estate tax needs to start with the gross estate. The gross estate is what includes the fair market value of all property which your family member may have owned or had an interest in at the time of their death including the life insurance and annuity proceeds. In some or certain instances, the gross estate can include the value of the property which was owned in the three years right before the family member’s untimely death. The tax law unfortunately, would only provide a limited number of deductions that would reduce the gross estate’s value. These deductions would mostly be including things like the funeral expenses, payments to satisfy outstanding debt, or the value of the property intended for donation after death, and even any state death taxes and the value of property that transfers to a surviving spouse. Usually, you pay your estate tax when or only when the tax on the net taxable estate was to exceed or go beyond your remaining balance of the unified credit then only does the estate need to remit a tax payment to the IRS. After you are able to make the calculation of the taxable estate and you have been able to complete it, you have to increase the amount by the value of all taxable gifts made since around the year 1977. Gifts of property or things like money that your recently deceased family member made during his or her life are taxable if they exceed certain limitations which are provided annually. One thing you must keep in mind is that, you do not have to increase the taxable estate for any gifts that did not exceed an annual limitation or the gifts for which you file something known as a gift tax return. Lastly, only the value of the tax which is on all transfers, and that exceed the unified credit amount is due. Now due to the volatility of the estate tax laws, the amount of the gross estate that is not taxed will not be determined until the year of death.

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