» IRS Extension of Estate Tax Break Takes Effect

IRS Extension of Estate Tax Break Takes Effect

Hook Law Center (formerly Oast & Hook)

Hook Law Center (formerly Oast & Hook)

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
Phone: 757-399-7506
Fax: 757-397-1267

SUFFOLK
5806 Harbour View Blvd.
Suite 203
Suffolk VA 23435
Phone: 757-399-7506
Fax: 757-397-1267
http://www.hooklawcenter.com/

  • What personal representatives of estates need to know
    Personal representatives, or executors, of estates need to be aware of the procedure that is used to probate an estate with a will. The executor who is designated in the will must make an appointment with the probate division to probate the will and become qualified to serve as executor. To do this in Virginia, […]
  • Help may be needed in deciding on senior housing
    Elderly people who value their independence and are accustomed to living alone are increasingly becoming incapable of doing so. The need for medical attention may prompt some older individuals to consider their options, including moving to a nursing home or another kind of assisted living facility. Another possibility is to have in-home care along with […]
  • Net gifts can be used to reduce gift tax rate
    One strategy to lower your taxable estate is lifetime giving. However, there is a gift tax rate of 40 percent. If you have exhausted your $5.43 million gift and estate tax exemption, and you wish to lower your gift taxes, consider the possibility of making net gifts. This method obligates the recipient to pay the […]
  • Andrew Hook talks to Stretcher about revocable living trusts
    In an interview for Stretcher.com, Attorney Andrew Hook explains the meaning of a revocable living trust by dividing the term into its main parts: “revocable,” “living” and “trust.” He describes a revocable living trust as a legal agreement in which a person, who is referred to as the “settlor” or “grantor,” transfers property to a […]
  • Learn what government benefits are available to help pay for long-term care
    There are a few government programs, including Medicare and Medicaid, that can help pay for long-term care services. Each program has certain regulations concerning which services are covered, your eligibility for benefits, the length of time you can receive benefits, and your out-of-pocket costs. In order to prepare for your long-term care needs, you should […]

See other news sources publishing this article. BETA | Tags: , , , , ,



Get headlines from Law Firm Newswire sent right to your inbox.

* indicates required