Question

how do state estate tax payments or state death tax payments affect the estate tax return

Answer 1

Tax levied on the right to transfer the property rights of the deceased person is called the estate death tax. This tax is levied on estate based on the current value of deceased person's assets.

Estate taxes consists of two types of payments mentioned below

1. Transfer of assets from the deceased person to the accounts of their beneficiaries mentioned by them. Internal Revenue Service (IRS) form 706 is required for reporting of Estate tax when transfer of property from deceased person is done to their beneficiaries.
2. Also the income generated from the assets of the deceased person is also taxable and it is required to pay estate income tax

On the death of the person the belongings in terms of his assets are transferred to the estate and becomes their property. According to the U.S. Income tax Return for Estates and trusts it is necessary to fill IRS form 1041 in case the annual gross income generated is more than $600 by the estate.

• Estate tax are exempted in case the assets of the deceased person are transferred to their spouses.
• If an individual gift his/her assets to someone before they die then estate tax can be avoided to the certain limit of $15000 i.e. a taxpayer can gift assets worth $15000 to any individual to avoid the estate tax upto $15000
• It is required to file the estate tax as the deceased person and their estate are two separate tax entities therefore it is required to fill form 1041 of Internal Revenue Service i.e. IRS