» 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/

  • Avoiding retirement planning pitfalls
    Although most people are aware of how important it is to plan for retirement, it is easy to fall into retirement planning pitfalls that have significant consequences down the line. One of the most common pitfalls is money itself. Many people simply do not save enough early enough. It is recommended that people save enough [...]
  • Seniors and their families should apply good judgment in considering nursing home placement services
    Nursing home placement services, which offer to help find the perfect housing for seniors, are a growing trend in elder care. These services are offered for no charge, and they claim to demystify the world of elder care facilities. However, seniors and their families should use good judgment in choosing a nursing home placement service. [...]
  • Aid and Attendance benefit can help veterans who need long-term care
    Veterans who need long-term care services like in-home care or residence in a nursing home can receive financial assistance through the Veterans Administration (VA) pension benefit Aid and Attendance. This often-overlooked benefit provides money to veterans who need help with day-to-day tasks. The pension is designed for veterans and surviving spouses who require help to [...]
  • Older people without children may wish to designate a caregiver
    Older adults who do not have children do not have the built-in support system from which many people with children benefit, which puts them at risk if they become ill or injured. In order to ensure they receive good care that is in alignment with their wishes, these individuals should designate a caregiver while they [...]
  • 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 [...]

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



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

* indicates required