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Taxes for your estate

 

Estate taxes are not exactly a common topic to be discussed about by people on a daily discussion oor conversation. When you walk down a street you hear mostly about fashion and what not but not at all estate taxes. If you have heard iit though, you must have passed acouple of tax collectors or something. Basically we then need to clear out what an estate tax is. This is a tax that you would have or need to pay on the money and other property that comes to you because someone has died or has passed away. In some cases this is talked about when someone is deceased. Some people knoe this also as a tax on an estate that you inherit, and a tax levied on an heir’s inherited portion of an estate if the value of the estate exceeds an exclusion limit set by law. The estate tax is mostly imposed on assets which has been left to be distributed or left to heirs, but it would not really mean that it would apply to the transfer of assets to a surviving spouse. The right of these spouses to have to leave any amount to one another is known as the “unlimited marital deduction.” This is then wen the surviving spouse who inherited an estate had died, and then the beneficiaries may then owe estate taxes if the estate exceeds the exclusion limit. Because the estate tax can be quite high, careful estate planning is advisable and is more than anything needed given how important it is to get things financial very secure.

It was even evident that back in the year 1997, there was a change in U.S. laws which then included the increased the value of assets that a beneficiary may exclude from federal estate taxes. With this change of laws, mostly all the small business owners became able to pass on farms and other qualifying businesses to their heirs in a more simple way.

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estate taxes

It is always good to know about the things we are not familiar with. A good example would be estate taxes. This is something which usually is something that is seen in many different countries including the Philippines. Here in the Philippines,  it would not matter if you were to be  a citizen of the country, unlike when compared to other countries. A good example of all this would be when a decedent was a resident of a different country like Singapore and the was able to become a citizen before he or she has passed. In the event that this were to happen, the properties which were owned in the Philippines will be subjected to the estate tax. So how exactly is the computed for? The law actually plays a big part here. The estate tax is actually supposed to be appraised at the fair market value. This would be between 2 values and they are known as the fair market value done by the commissioner, including the “zonal value” and the “assessed value”. This then would all be up to which value would come out higher . Most of the time, the zonal value would end up coming out at a higher rate if you put it in to comparison with the assessed value. There are some times where in the zonal value would approximate the high market price as well. We should recognize that during that time, the fair market value is what was prevailing during that time of the decedent’s passing. For the deadline of the tax return, there are numerous ways to extend this deadline. If ever those in charge would then notice that the payment would impose hardship on the estate or the heirs, an extension could be made. Usually, the extension would be from 3-5 years.

 

 

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How estate or inheritance tax works

The quote by the ever famous Benjamin Franklin once said that “In this world nothing can be said to be certain, except death and taxes.” It may be an old, sardonic aphorism but nevertheless is universally true and pretty much accepted. One delightful area of tax law manages to combine both death and taxes into a single experience and this is the estate or inheritance tax. In fact, what happens to your money when you die seems to be the source of quite a few old questions to oneself. Many people would usually use clichès such as “You can’t take your money with you,” among others. What it all boils down to is pretty much straightforward. This is that when you die, you leave your money, your home, your possessions and other things of material value behind and you really cannot take it with you. You will pass them down to your children, to other family members or friends, or to charity as well. And one way or another, the government will take its share without your consent. In practice, of course, nothing is as simple as that. The property of the deceased might be subject to inheritance tax, or the so called estate tax, state and federal tax statutes, and a host of exemptions that may actually put more money in the pockets of the heirs. Because inheritance and estate taxes which are also sometimes known as “death taxes” are generally seen as a tax on the rich, since they are the most affected and these tax laws also get batted around as political footballs from time to time. In fact, President Obama has even signed a law changing federal estate taxes which was effective in 2010, and there are likely more changes to come. If you are interested in planning ahead for that inevitable day when you or a loved one passes away, you have made a good decision. In this article, it is explained what the difference between inheritance and estate tax is, and how to avoid as much of those taxes as legally possible, and what the actual rates are for those taxes as well. What would exactly count toward the estate, anyway? Would it just include the money in your piggy bank? The bank account? The summer home in the Hamptons? An estate is all of those things, and more like Cash, accounts, real estate, stocks and bonds and other business interests, and valuable goods like cars, boats, art pieces or rare collections. An appraiser will determine the fair market value of everything to be able to figure out the taxable value of the estate. So far, for anyone who dies and wants to leave anything of value to his or her heirs, things look pretty grim. There’s a bright spot, though — exemptions that reduce the taxable amount. We’ll discuss that next.

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Death real estate and estate taxes

The month of November we remember our dead. All Saints’ day and All Souls’ day. On any other time and day, the topic of death is usually avoided. It is a reality though, that a time will come when we will all die and it’s just a question of when.

Immediately after the death of a love one a person can be in a state of despair, overwhelmed with feelings of grief, emotional pain and inability to function. This we may know from experience. But, we need to face the fact that there are arrangements needed to be made and that someone has to do it. Arrangements such as the embalming, wake, casket, place of burial and the gravestone. Then the matter of the estate tax that will need to be taken care of.

At the transfer of the net estate,  an Estate tax will be imposed which is the difference between the gross estate (as defined under Section 85 of the Tax Code) and allowable deductions (under Section 86) of the decedent. A tax estate return is needed to be filed and paid to be able to transfer to the heirs the real estate of the decedent. Estate tax rates are graduated and will be based on the net estate amount.  Many problems arise when there is non payment of estate tax making it difficult to transfer to the buyers/heirs.

Gross estate is described as the value of all property, real or personal, tangible or intangible, wherever situated at the time of death. When decedent is a non resident or not a citizen of the Philippines at the time of his death, the only thing that will be included in the gross estate will be that part of the entire gross estate which is situated in the Philippines. Any proceeds of life insurance  are included in the gross estate and shall remain so unless the beneficiary is designated irrevocable.

 

 

 

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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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Estate Tax Information

There are of course those times where in some people have not yet gone over their grief or pain for the loss of a loved one and already have the hassle to deal with the tedious job of document processing in connection with the properties or the estates which are left behind by the deceased. These properties of a deceased person will not be able to be transferred to his heirs without paying the necessary estate tax. Now the so called payments to the estate tax is based on the principle that the estate of the deceased person or one who passed is one juridical personality and it has a right to transfer property to their heirs is a privilege and is thus subject to of course tax or better known as transfer tax. The return or estate tax form which is found under the BIR Form No. 1801 will need to be filed with the Bureau of Internal Revenue for the payment of the estate tax which is required. We must be hopeful that the following guidelines can aid the heirs in sorting out the extremely tiresome process of this estate taxation at such a sensitive time in their lives. This return must be filed in triplicate which is done by the executor, or administrator, or any of the legal heirs of the decedent, whether they may be a resident or non-resident of the Philippines. If there is no executor however or administrator who is appointed, qualified, and acting within the Philippines, then by chance any person in actual or constructive possession of any property of the decedent is able. Basically, a return is required to be filed in all the cases of transferees where estate tax is due. However, where no estate tax is due, a return would still be required where the gross value of the estate needs to exceed two hundred thousand (P200,000) pesos. Or if ever this is where it was regardless of the gross value of the estate, it would need to consist of registered or registrable property such as real property, motor vehicle, shares of stock or other similar property for which a clearance from the BIR is required. A good example of this would be bank deposits which as a condition is precedent for the transfer of ownership thereof in the name of the transferee.

 

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Learning about Estate Tax

What exactly is Estate Tax? Curious people will be shocked to find out that this is your right to transfer your property when the time of your death has arrived. Yes this is Estate Tax and No this is not a Will. These two things are totally different. Let me clear out for you what an estate Tax really entails. This would consist of an accounting of basically everything that you have owned or any interests at the time of your death. The fair market value is what will be used. This may not exactly be what you originally paid for your asset or how much they were when you got them when back when. Gross estate would be the total of all these items that you possess. This will include mostly assets, property, business, trusts, and insurance. Once the gross estate has been accounted for, it will be given a few deductions here and there which will arrive at your taxable estate. In special instances, there may even be a reduction in value. Mortgages, other debts, estate expenses, and qualified charities. After the basic net amount has been computed for, the value of lifetime taxable gifts will be added to the number you get then after the tax will be removed by the available unified credit. Mostly simple estates like cash, publicity traded securities, small amounts of other assets that may be easily valued, and there will be no special deductions which will be given or elections, or any jointly held property. These do not at all require any filing of an estate tax return. The filing will only be asked for or required if for instance your estates with all the combined gross assets and prior taxable gifts would exceed $1.5 million, $2 million for descents who died in 2009. For the years 2010 and 2011 being more recent it would be $5 million dollars (in exemption to the rule for some descents who passed in the year of 2010). Now from the year 2012 to this year, this prices would range from $5.1 million dollars to $5.3 million dollars.

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Charitable giving for smart estate planning.

Charitable contribution could fulfill your obligation as a human to help another human being and giving help to others provides the fulfillment that we need and we will feel amazing about it which is an addition to the altruistic and goodwill benefit from sharing what we have. Apart from this, most countries provides tax advantages to those individuals who make it a habit to donate to qualified charities.
When you plan for your estate, it is best to plan and consider to donate and give to charity that are deemed qualifies by the IRS (US residents). Many Americans donate to the charities not just to help their favorite foundation but also a strategy to deduct it from their taxes once tax season arrives. Charity giving is also a wise route to maximize planning for your estate, since charitable contributions are 100% deductible from estate taxes.
Most tax payers who does plan for their estates chooses to set a trust that could benefit their preferred charity after a certain period of time. The trust they usually set up is called Charitable remainder trust. Setting up this trust can help your assets gain income within your lifetime and could provide outstanding tax benefits and exemptions not just for you but also for your heirs.

Within the charitable remainder trust, your assets play a rather large role being placed in the trust where assets can be sold by the trustee to set up investment which can generate revenue for a certain period of time you choose to declare.
Once the time period you chose expires the remaining  assets placed in the charitable remainder trust will be given to your choice of charity.

In many cases, donors prefers to take this route because it does generate significant benefit both for him/her and the chosen charity. A charitable remainder trust are either annuity trust or unity trust. Revenue from annuity trust is fixed percentage of the initial fair market value if the assets placed in the trust. On the other hand, unitrust income is fixed percentage of the determined fair market value annually.

To safely determine which trust best suits for you, it is best to talk to your financial consultant. In most cases there are no capital gains taxes on assets transferred to and sold through a charitable trust which also has the potential to generate substantial income to be used by the donor as well as create a revenue generating tax deduction for the donor.

 

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5 Rules to Know about Estate Tax

There are times when people like us are not able to process the death of a loved one and already they are made to deal with the ultimately tedious process of document processing in connection with the properties or the estate left behind by the deceased. These properties of the deceased cannot be passed down to the heirs unless you have paid the estate tax. The payment of this estate tax is based mostly on a principle that states that the one who passed is one juridical personality and it is alright to transfer the property to the heirs or heir which is thus subject to transfer tax. The return or estate tax form will have to files by the Bureau of Internal Revenue to be able to pay the estate tax. These are 5 rules that will help you in the processing of your estate tax.

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  • When are you supposed to file your tax estate return? The estate tax return must be filed within around 6 months from the death of the deceased. In another case, the commissioner may have authority to grant an extension which will not exceed thirty days to be able to file the return.
  • Next is where to file your tax estate return. This return will have to filed with what we call the Bureau of Internal Revenue district revenue or it can also be filed in it’s representative having jurisdiction over the place of domicile of the deceased at the time of his or her death. If by any chance the deceased would have no legal residence in the Philippines, the return need to filed in the Office of the Commissioner (Revenue District Office No. 39, South Quezon City).
  • Who will file the tax estate return? This needs to be file by the executor or administrator of the legal heirs of the decent whether or not they may be a resident of the Philippines. If by an chance there is no executor or administrator who is appointed, or acting within the Philippines, then any person who may be in actual or constructive possession of any property of the deceased.
  • When and where? Once the return is filed, the estate tax which is due must be paid to the BIR Authorized Agent Bank where the return is supposed to be filed. If for instance there are no AAB’s, the payment will be made directly to the revenue Collection officer.
  • Examples of documents that need to be submitted would be the Notice of death, Certificate of death, Latest true copy of tax declaration of real properties at the time of death, etc…

 

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Taxes in Japan

Japan Logo

Japan Logo

Taxes Logo

Taxes Logo

 

There are also different types of taxes being paid in Japan and here are some of the most common ones.

The income tax, also known as residence tax for some, is the tax that is dependent on the person having work, it may be high for people with high salaries, or low for those who does not earn that big. It can be paid in natural, prefectural or municipal level.

Next is the Enterprise Tax, unlike for the employees, this specific tax is paid by people who have their own business, the percentage to be paid is also dependent on the income their business is earning, as well as the type of business. It is a type of prefectural tax.

Next is the Property Tax, which is somewhat self-explanatory, it is taxes paid by those who owns a property or a land.

The consumption tax comes next, these are taxes that are added to goods and services, and from 8%, it is projected to increase to 10% in the October of 2015.

Next does the Vehicle related taxes which are being paid by those own an automobile. Different cars correspond to different taxes and when initially owning an automobile, a prefectural automobile acquisition is to be paid too.

For those who are drinking and having fun buying alcoholic beverage, a certain tax are being paid as well. This is grouped together with the tobacco and the gasoline tax and is shown on the receipt issued by the shops.

As for classification or variation of the people paying the taxes, it is divided into three, the resident, non-resident and the permanent ones. For the non-resident, a person is classified to be one when he had lived in Japan not more than a year, and his main business or line of work does not reside in Japan. In case he have multiple business both in Japan and abroad, those income coming from Japan are the only ones getting taxed and the one from abroad stays as it is, no tax deductions. For the non-permanent resident, the duration is now less than 5 years, same tax rules apply, however, those income from abroad that gets send to Japan will be taxed as well, even if the main income came from a different country. And lastly is the permanent resident, the duration is now 5 years or more, or those who plan to live at Japan for good. This people gets taxed  both from income inside Japan and income coming from abroad.

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