If you live in the United States, you already know the truth behind the modern-day adage that the only certain things in life are debts, taxes and death. It’s a fact of life that the best Rochester accounting firm - Rizzo, DiGiacco, Hern&Baniewicz are well aware of because of their dealings with clients involved in these things.
One of the trickier matters that accountants must deal with as part of their job is combining taxes and death. Combining two of the inevitabilities of life results in debts that the concerned individual must pay in full lest the taxman cometh and enforces the law’s long arm into your affairs.
Here then are a few must-know things in relation to death and taxes as well as the debts that arise from their combination. Ask for the professional opinion of a reliable Rochester accounting professional in case a few things require clarifications.
One Combo Tax
The good news for would-be heirs and gift-givers: Most estates will not be required to pay for federal estate or gift tax. Why? Because you can leave or give away considerable amounts of property on a tax-free basis!
Under the present laws covering the unified gift and estate tax, individuals can give away to their recipients or leave to their heirs up to $5.25 million in cash and non-cash assets before paying for applicable taxes.
The bottom line: You can stop worrying about the unified gift and estate tax when you fall under the non-wealthy (i.e., multimillionaire and billionaire) set. You are, nonetheless, well-advised to ask for the professional advice of a reliable Rochester accountant to maximize your generosity to your heirs and recipients while minimizing your taxes.
Personal Exemption
Since gift and estate taxes change from one year to the next, you are well-advised to always seek the expert guidance of an experienced Rochester accounting and tax professional on these matters. This includes the issue of personal exemption, which permits for non-taxable transfer of assets as gifts or inheritances within set dollar amounts.
Keep in mind that the set amounts are indexed for inflation so increases in future years are always a possibility; ask your Rochester accountant for any possible changes. For deaths in the following years, the personal exemptions are:
• 2011 - $5 million
• 2012 - $5.10 million
• 2013 - $5.25 million
If your estate is worth less than the above amounts at the time of your death, then you and your heirs will not owe federal taxes. If you have made taxable gifts while you were alive, on the other hand, the amount of your individual exemption will be reduced by the amount of taxable gifts made.
If you belong to the non-super wealthy set, as are 99% of the population in the United States, then you can leave your estate to your heirs without the IRS dipping their hands into it. Well, at least at first but by then you have become wiser about the ways of the taxman, thanks to the expert assistance of the best Rochester accounting and tax professionals.
But as always there are exemptions to the rule so ask us for further information. This is especially true in the State of New York where the state government collects on estate taxes even when the federal government cannot.
