Federal Estate Tax
The Tax Cuts and Job Act brought in plenty of changes from 2017 and 2018. One of the largest changes was to the federal estate tax, which was essentially doubled. The estate tax was raised from $5,490,000 in 2017, to $11,180,000 in 2018. But how does the estate tax work, and does it affect you?
The beginning dates back to 1916 when the United States government imposed a tax on estates of decedents. It the century since then it has evolved into what we see today. A tax that is placed on certain families and individuals that have estate that cross over the threshold.
The current threshold of $11,180,000 for the tax year of 2018, is much too high to effect vast majority of Americans. The result of this is that most Americans’ estates will not be taxed after the death of a loved one. In order to qualify for the federal tax estate tax, the estate will have to be valued at over $11,180,000 at the time of the decedent’s death.
If you have an estate hovering around the threshold, there are a number of deductions that may apply to the estate as well. Deductions such as mortgages, other debts, estate administration expenses, and qualified charitable deductions are all allowed to count against the value of the estate for tax purposes.
If you have questions about the federal estate tax, feel free to contact the professionals at the Center for Financial, Legal & Tax, Inc. We have numerous professionals that will be able to answer your questions and help you navigate the estate taxes.