Estate and Probate Attorney in Cincinnati Ohio » Income Taxes and Estate Taxes

Federal Estate Tax Return

admin — Tue, 29 Mar 2011 09:09:23 +0000

Whether an estate has to pay federal estate tax also depends on the size of the estate, and the nature and extent of any estate planning that was done. If everything is left to a surviving spouse, there is no estate tax because of an unlimited marital deduction. Estate tax returns must be filed even though no tax is due. If the decedent was not married and the estate exceeds $5,000,000, (2011 and 2012) estate taxes are paid to the federal government. The current federal estate tax rate is 35%. Thus if a person dies with an estate of $6,000,000 which is all going to a child, the tax bill would be $350,000.

Currently the federal estate tax rules are in a state of uncertainty. In 2013, the credit goes back to $1,000,000 if Congress does not change the rules.

Ohio Estate Tax Return

admin — Tue, 29 Mar 2011 09:08:45 +0000

Whether an estate has to pay Ohio estate tax depends on the size of the estate and the nature and extent of any estate planning that was done. If everything is left to a surviving spouse, there is no estate tax because of an unlimited marital deduction. Estate tax returns must be filed even though no tax is due. If the decedent was not married and the estate exceeds $338,333, estate taxes are payable. Ohio taxes the net estate (gross estate less the deductions) at the following rates.

Up to $338,333 – tax free
$338,334 to $500,000 – 6% tax rate
Over $500,000 – 7% tax rate

Even if the estate is less than $338,333, an Ohio Form 22 must be filed if there is real estate involved in the estate. This is public notice that there was no Ohio estate tax due on the estate to remove any Ohio estate tax lien against the real estate.

Click here for a link to a visual representation of the current Ohio Estate Tax Law.

Estate Income Tax Return

admin — Tue, 29 Mar 2011 09:08:19 +0000

An estate may be required to file an income tax return for the income and deduction received during the period of administration. The form is IRS Form 1041. An estate can elect a fiscal year. Thus, if a person dies on March 10^th of a given year, the fiscal year for the estate is March 10^th through February 28^th of the next year. If income is received and the estate is not closed by the end of the period, then the estate pays income tax on the income earned. If the estate is closed by the end of the period, any income or deductions are passed through to the beneficiaries who inherited the estate. Thus, if there was a dividend check of $2,000 received by the estate and there were two beneficiaries, each would include $1,000 in dividends on their Form 1040 in the year the estate closes.

Decedent’s Final Income Tax Return

admin — Tue, 29 Mar 2011 09:07:14 +0000

A final income tax return is prepared for the decedent for the period beginning January 1 through the date of death. All income received during this period is reported on the final income tax return (Form 1040) which is due on April 15 of the next year. The surviving spouse is still entitled to file a joint income tax return even though his/her spouse died during the year. All income earned after the date of death is reported on the income tax return for the estate (Form 1041).