IRS Rules Defining Taxable Estate for 2017 Tax Year.
Taxable Estate in 2017. Last Updated November 2016.
Do YOU have a taxable estate? Many provisions in the Internal Revenue Code are indexed for inflation. The amount of taxes that you pay will change when these rates change each year.
The most important rule changes for estate and gift taxes are the amount excluded from taxation depending on the size of the estate and the amount of gifts that can be made tax-free.
Most Estates Not Taxable
Estate taxes were virtually eliminated when Congress moved the estate tax exemption to $5,000,000. Very few estates have that much value. The rule change for new exemption amount, indexed for inflation, is $5,490,000. Remember that if someone is married, on the death of the first spouse to die, an election can be made to allow the surviving spouse to use any of the deceased spouses exemption that is not used by him or her.
The annual gift amount that can be made tax-free remains at $14,000. This means that if someone has an estate that might be over the $5,430,000 at death, that person can give away $14,000 each to family members and thus bypass that being in their estate. If properly structured, that $14,000 can be used to purchase a life insurance policy that will pay any remaining taxes and that will not be included in the estate of the deceased.
Keep Up with the Tax Code if You Have a Taxable Estate
Be sure to watch the information on the tax code for changes with the election of President Donald Trump, who has advocated for significant changes in the code.
Income taxes are also affected by the inflation increases. The standard deduction rises to $6,350 for singles and married persons filing separate returns and $12,700 for married couples filing jointly. The standard deduction for heads of household rises to $9,350.
As was the case for the last few years, the amount of itemized deductions which you are allowed to claim is reduced by 3% of the amount by which your adjusted gross income exceeds certain threshold amounts.
Almost four dozen other rates, exclusions, deductions, and limitations have been changed, including the levels at which you jump into a higher tax rate. If you need to consider taxes in your estate planning, please call the Bob Leonard Law Group, PLLC. Your accountant or enrolled agent will be able to apply the other rule changes to your income taxes when you file them.