How to Compute Real Estate Tax Proration and Tax Credits Illinois from www.anmtg.com
Understanding Estate Tax in 2023
What is Estate Tax?
Estate tax, also known as inheritance tax, is a tax imposed on the transfer of property after a person's death. The tax is usually levied on the value of the property transferred and is paid by the estate of the deceased.
Who Pays Estate Tax?
The estate tax is paid by the executor of the deceased person's estate. The executor is responsible for filing the estate tax return and paying any taxes owed.
What is the Estate Tax Exemption?
The estate tax exemption is the amount of property that can be transferred without incurring estate tax. In 2023, the estate tax exemption is $11.7 million per individual or $23.4 million for a married couple.
What is the Estate Tax Rate?
The estate tax rate is the percentage of the value of the property that is subject to tax. In 2023, the estate tax rate is 40%.
What Happens if the Estate Tax Exemption is Exceeded?
If the estate tax exemption is exceeded, the excess amount is subject to estate tax at the current estate tax rate of 40%.
How is Estate Tax Calculated?
Estate tax is calculated by adding up the value of all the property in the estate and subtracting any debts and expenses. The resulting value is then compared to the estate tax exemption. If the value exceeds the exemption, the excess is subject to estate tax.
What Property is Subject to Estate Tax?
Generally, all property owned by the deceased person is subject to estate tax. This includes real estate, cash, stocks, and other assets.
Are There Any Exemptions or Deductions Available?
There are certain exemptions and deductions available that can reduce the amount of estate tax owed. For example, if the deceased person's property is left to a surviving spouse, it may be exempt from estate tax.
What is the Deadline for Filing Estate Tax Returns?
The deadline for filing estate tax returns is nine months after the date of the deceased person's death. However, an extension of six months may be granted if requested.
What Happens if Estate Tax is Not Paid?
If estate tax is not paid, the IRS may place a lien on the property in the estate or take other collection actions. In extreme cases, the executor may be held personally liable for the unpaid tax.
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