Even in Your Grief, Estate Taxes Must be Attended to

October 27, 2013

  Ask any Rochester accounting and tax professional from the ranks of Rizzo, DiGiacco, Hern&Baniewicz about estate taxes and you will be informed that, even in the midst of your grief for the death of your beloved spouse, you must attend to estate taxes.

Yes to State Tax, No to Federal Tax on Estates

It must be emphasized that the federal government will not collect taxes on an estate worth less than $5.25 million for deaths in 2013. But it can still be required to pay for estate taxes to the State of New York with rates starting at 5% and going as high as 16%. The State of New York collected estate taxes on estates worth more than $1 million!

When you are facing the possibility of paying for estate taxes to the state and/or federal governments, you must hire an experienced Rochester accounting and tax professional for the purpose. Keep in mind that United States and New York taxes in general as well as Rochester taxes in particular should never be ignored lest the law’s long arm catches up with your affairs. Yes, even when you are still in mourning over the death of your spouse.

Surviving Spouse Left with Property

Yet another piece of silver lining amidst the dark clouds of grief is that you can avail of the so-called marital deduction. Any property left by a spouse after his/her death is exempted from both state and federal estate taxes regardless of the amount. This is the main reason why couples will not owe any estate tax upon the death of the first spouse.

Same-Sex Married Couples Retroactive Treatment

Since New York is a same-sex marriage state, a same-sex couple can also leave assets to each other without being subjected to the state’s estate tax rules and regulations. In the wake of the United States’ Supreme Court 2013 decision directing the Internal Revenue Service to provide legally married same-sex couples with the same rights and responsibilities tax-wise with heterosexual couples, the state retroactively extended the time when same-sex couples will receive equal treatment.

Surviving spouses of same-sex marriages can then apply for a refund on the state estate tax already paid. Since the refund can be complicated, hiring a knowledgeable Rochester accounting and tax professional makes perfect sense.

Submission of Estate Tax Returns

As with all New York and Rochester taxes, compliance with the rules and regulations on estate taxes is a must for executors of estates even when said executors are still in their mourning stage. The general rules include: (Ask your Rochester accounting and tax professional for clarifications)

• Your executor will file the federal and state estate tax returns regardless if payment of estate taxes is necessary or not. The taxing authorities will not also consider whether the assets are subjected to probate arrangements because the most important thing is that the assets are your property at the time of your death.

• Your executor should ideally file the tax returns and pay for the taxes due nine months after your death although extensions may also be requested and granted by the IRS.

Again, estate taxes are complicated in nature so hiring a Rochester accounting and tax professional will redound to your benefit.

Other Blog Post

LET'S TALK

RDG+Partners wants to be the primary advisor for motivated business owners. The firm is committed to providing boutique level accounting, tax and business consulting services to the Rochester, NY community.