Thursday, January 9, 2020
Opponents of the federal estate tax refer to it as the "death tax," carrying a more negative connotation, arguing that the income should not be taxed again since it was taxed when earned. Proponents argue that this is a fair and reasonable tax when money changes hands since otherwise the new "owners" of the assets would receive them scot free - essentially an unearned windfall.
Since the Tax Cuts and Jobs Act (TCJA) of 2017, only estates worth more than $11.4 million (per person, $22.8 million for a married couple) have to file an estate tax return and may the required tax. Any estates under that threshold are not liable for federal estate tax, though they may be responsible for a state tax depending on where they resided. 18 states and the District of Columbia have their own estate tax.
Prior to 2017, the exemption amount was less than half this amount per person. Due to this increase, approximately 2,000 households are expected to pay the federal estate tax this year, compared to a whopping 52,000 in 2000. If an estate is required to pay the estate tax, the representative must file a form 706 within 9 months from the date of death. Depending on how much the estate exceeds the exemption amount, the estate could be liable from 18% to 40% of the estate's value.
See Eric Rosenberg, Fewer than 2,000 Households Will Pay Estate Tax This Year, so Your Inheritance is Probably Safe, Business Insider, January 9, 2020.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.