IRS Extension of Estate Tax Break Takes Effect
Virginia Beach, VA (Law Firm Newswire) March 12, 2014 – The Internal Revenue Service (IRS) recently extended a tax break for married couples.
The ruling, announced in Revenue Procedure 2014-18, extends the deadline to take advantage of an estate tax break known as “portability.” The break went into effect on an interim basis in 2011, and it was made permanent under the American Taxpayer Relief Tax Act of 2012.
“The IRS grants every U.S. citizen a “basic exclusion,” which is a lifetime exclusion amount from estate and gift taxes,” Andrew Hook, a Virginia Beach estate planning attorney, explained. “For 2014, that amount is $5.34 million. Portability allows widows and widowers to add the unused portion of their deceased spouse’s basic exclusion to their own, increasing the amount of assets they can hand over to their own heirs tax-free.”
In order to elect portability, an estate tax return (IRS Form 706) must be filed on behalf of the estate of the deceased spouse. The normal deadline for doing so is nine months after the death, plus six months if an extension is requested.
Previously, many people who should have elected portability failed to do so, either because they or their advisors were unaware of the rule or because they did not expect the surviving spouse’s financial worth to exceed the basic exclusion amount.
The recent IRS ruling allows portability to be elected for persons who died during calendar years 2011 through 2013, were U.S. citizens or residents upon death and had a surviving spouse. The deadline to take advantage of this extension by filing Form 706 is December 31, 2014. The IRS instructs those taking advantage of the ruling to write at the top of the form, “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”
The Revenue Procedure announcement also allows for the credit or refund of any taxes overpaid as the result of failure to elect portability. The deadline for doing so is three years from filing Form 706 or two years from the payment of the tax — whichever comes later.
“This Revenue Procedure is of particular interest to same-sex married couples, who were only recently allowed to elect portability,” Hook added. “Like opposite-sex couples, they can now not only elect portability going back to 2011, but likely get a refund on taxes they paid as the result of their previous exclusion from this tax break.”
Hook Law Center
295 Bendix Road, Suite 170
Virginia Beach, Virginia 23452-1294
5806 Harbour View Blvd.
Suffolk VA 23435
- To help prevent elder abuse, address caregiver stress as it emerges
Elders are among the most vulnerable populations, and they are at special risk for abuse at the hands of their caregivers. Caregiver stress is one of the biggest contributing factors to elder abuse, and stressed-out caregivers are the most likely to abuse. Depression and anxiety are common among caregivers, who often provide hours of care [...]
- How to make homes safer for seniors
Older adults who continue to live independently at home will need a safe space in which to live. Making the home safe is essential for preventing injuries. Each year, around 7,000 elderly people die in accidents at home, while millions more sustain serious injuries there. Falls are the most common cause of injury. Drowning in [...]
- Eye and smell tests may make early detection of Alzheimer’s possible
Results of four new research trials suggest that changes to the eyes and ability to smell may be valuable in the early detection of Alzheimer’s. Reports presented at the 2014 Alzheimer’s Association International Conference in Copenhagen revealed that eye exams could be used to identify build-up of beta amyloid in the brain, while a decreased [...]
- Seniors may qualify for Medicaid by spending down assets safely
Federal law dictates that only someone below a benchmark level of assets can qualify for Medicaid, beyond which it is determined that the individual does not have the assets to pay for his or her own care. Many seniors who apply do not receive Medicaid because their asset level is too high to qualify. In [...]
- Facts to know about Medicare and retirement
If your 65th birthday is approaching, you should make sure you are aware of your Medicare options and are prepared to enroll in Medicare if necessary. Here are a few things you should know. First, if you are receiving Social Security benefits already, then you will be enrolled in Medicare Part A (hospital insurance) and [...]