Federal and State estate tax is imposed on the transfer of the taxable estate of a citizen of the United States. However, not every estate is subject to estate tax. We at Schwartz, Fang & Keating, P.C. are experienced in estate administration, ensuring that all assets are treated fairly and correctly.

What you should know about estates that are exempt from taxation:

If an asset is left to a spouse or a charity that is federally recognized, estate tax usually does not apply. Of note, if the estate is left to someone other than the above, only a certain amount can be taxed under the law regarding a federal gift or federal estate tax. The amount varies year-by-year, for instance for someone who died in 2014 any amount under $5,340,000 is exempt and $5,430,000 for a person who died in 2015.

Considering these exemptions only the largest 0.2% of estates in the U.S. has to pay federal estate tax. When these taxes are due only on the portion of an estate’s value that exceeds the exemption level is taxed. This means that at the 2015 exemption level of $5.43 million, a $6 million estate would owe estate tax on $570,000 at most.

Federal laws aside, each state has their own laws around estate inheritance and the taxation of such. In New York State, estate tax is paid on estates that exceed the basic exclusion amounts (or BEA.) For those who died between Aprils 2014 – 2015 the BEA is $2,062,500; April 2015s – 2016 the BEA is $3,125,000, Aprils 2016 – 2017 the BEA is $4,187,500 and for April 2017 – December 2018 the BEA is $5,250,000.

Now how do you know if you must file a New York State estate tax return? You must add up the estate’s BEA by calculating the amount of the deceased’s federal gross estate plus the amount of any includable gifts. Please note that includable gifts are those that occurred within three years of death.

For help filing or identifying if you need to file for federal or state estate tax please contact the offices of Schwartz, Fang & Keating, P.C. today.