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Source of Funds

Inheritance Tax

Inheritance Tax

 

Estate Tax

Estate Tax

The estate tax has been serving America as a source for funds, that is why this estate and inheritance tax are still present and had been there for the past 90 years. These taxes serve as balance so that the money does not remain on the hands of the wealthy people alone, or the powerful ones, but is distributed for the benefit of the state through the government services provided which are being funded by tax.

The Statistics of Income Division (SOI), together with the partner organizations or sub-organizations, have been gathering statistics on different estates that are being filed by the Federal estate tax returns since the start of taxation on 1916. The data being studied are then used to arrange the giving of tax and how it is being administered to people, how it is being divided and how it is being partitioned.

The statistical output obtained from estate tax returns are also being used for both the current annual revenues and at the same time foresee future receipts. Estate tax data are also the thing that determines how the economic and social behaviour works or functions for the wealthy people. For example, the effects of changing the estate tax laws when one has a private business and the effects of changing it when one has  a charitable institution, both of which are being considered when changing the estate tax laws.

This estate tax has been a headache for the wealthy and that is the reason why the term “death tax” was born. Basically, estate tax is the tax that is imposed when a certain deceased person wants to transfer his property to a beneficiary after dying. For the rich, they have a lot of property to transfer and the tax imposed on these properties are way too much because its main purpose is to limit the giving of property from one generation to another. This uprooted during the war and the purpose was to raise revenue whenever crisis will upsurge or whenever war takes place. From there, it had been improved through time and it became a general law to be followed by everyone and even if wars are not happening now-a-days, still the wealth of the people is being controlled. There are also certain limits as to how much one can own, and with this property that’s being owned, there are also certain exemptions as to the tax that can be imposed and there are some possible ways to lessen these taxes.

 

Image By: blog.citigroup.com/  faireconomy.org

 

Estate Tax Law Revised

New Tax Law

New Tax Law

Modified Taxes

Modified Taxes

The new estate tax law is a lot better than the old one for the consumers or the one who are benefiting from it since from 3 million dollars exemption from tax, it became 5 million dollars exemption. However, a major problem occurred when during the year 2013, from the 5 million dollars exemption “death” tax, it regresses back to 1 million dollars which is a big adjustment in just a span of one year and for sure the Americans will get affected a lot.

The Estate Tax should be a real benefit for those who are hardworking and want their children or even grandchildren to not suffer like they did, if ever they did. The elders want their next heirs to have a good life that is why they try so hard to earn and hand down what they’ve worked so hard for. And if the estate tax will take majority of that, then it wouldn’t be fair.

When one gets married, that exception of 5 million dollars now becomes 10 million dollars, making the estate property to be handed down be bigger and larger in value, this is a major change that will affect millions, especially the wealthy. It is both a benefit and a loss, a benefit for the poor, since the tax will not affect them on a broad scale and at the same time they get to enjoy the free government premises and other benefits, and a loss for the wealthy, since it serves as a donation in respect of their country, to help their nation as a whole and they have no choice since it is within the law.

Last 2012 in the U.S., there was a new gift exemption which was called the Unified Credit Shelter Amount which raised the exemption amount from 1 million dollars to 5 million dollars. Now this serves as good news for the wealthy people since they can now give their young ones the whole of their estate without imposing tax to be deducted. Yes, taxes are indeed very important in all countries since this serves as the financial supply of the government in order to make the country a better place by building infrastructures, hospitals, roads and bridges, houses, etc., all of which are the main essentials and basic necessity. However, not all the people in the government are honest, and for those dishonest ones, it is the wealthy and hardworking civilians that get affected by the said system.

Image By:  Estateplanning.com/ monarchtax.net

Inheriting Wealth; Here Come the Taxes

When someone passes away and has a lot of property and material wealth, these are usually passed on to an inheritor, or a number of inheritors, unless stated otherwise by the person who passed away. There are costly problems, however, imposed by law that may get in the way of you being able to maximize the potential collection of your inheritance.

Depending on the kind of inheritance being, given, there are different taxes to be imposed on what you receive. These taxes include state taxes, federal tax statutes, estate taxes, and inheritance taxes. You can avoid paying a large chunk of these costs if you practice estate planning. Before we get to that, let us first discuss what happens to your inheritance in case you fail to follow safety procedures.

Inheritance Taxes

You’ll still have to pay taxes!

In the case of someone who does not declare who he or she wants to leave his inheritance to and it falls on you, expect to have a large percentage ripped off of your inheritance items, as calculated by an appraiser. In most cases, not much is spared – the appraiser will look at the cost of everything from property, to cars, bonds, savings, stocks, and even expensive jewelry. Anything of great value will be looked at!

Estate Taxes

Yup, dad’s boat counts

Before you even get to think about inheritance taxes, what you’re getting has already been deducted from. Because “Estate” refers to the total amount of someone’s assets, estate taxes are the amount extracted from the collective possession of the person’s assets. The person who takes charge of this is called an executor, and does whatever it takes (including selling some items) to pay off whatever debts the person being handled has failed to pay. After that, taxes are imposed by the federal government. Only then is the amount passed to you, only to be slapped with a new collection of taxes.

Act Now

If you’ve got a lot of money to give and you’re worried about having to pay that large of an amount as tax, don’t worry – there are ways around it. All you’ve got to do is act as soon as possible!

Inheritance tax exemptions can apply to you – for example, if you’ve got less than $5M to give to your kids, then estate tax is evaded. This goes up to $10M if the estate belongs to a couple. Naming specifics as to who will inherit what also helps a lot. You can hire someone who specializes in planning the distribution of your estate to make sure!

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