Estate tax may apply to your taxable estate at your death. Your taxable estate is your gross estate less allowable deductions. taxmap/pubs/p950-002.htm#TXMP68a5eeb4
Your gross estate includes the value of all property in which you had an interest at the time of death. Your gross estate also includes the following:
- Life insurance proceeds payable to your estate or, if you owned the policy, to your heirs;
- The value of certain annuities payable to your estate or your heirs; and
- The value of certain property you transferred within 3 years before your death.
The allowable deductions used in determining your taxable estate include:
- Funeral expenses paid out of your estate,
- Debts you owed at the time of death,
- The marital deduction (generally, the value of the property that passes from your estate to your surviving spouse),
- The charitable deduction (generally, the value of the property that passes from your estate to the United States, any state, a political subdivision of a state, the District of Columbia, or to a qualifying charity for exclusively charitable purposes), and
- The state death tax deduction (generally any estate, inheritance, legacy, or succession taxes paid as the result of the decedent's death to any state or the District of Columbia.
For more information on what is included in your gross estate and the allowable deductions, see Form 706 and Form 706-NA and their instructions.taxmap/pubs/p950-002.htm#TXMP0d9c2dee
Basically, any unified credit not used to eliminate gift tax can be used to eliminate or reduce estate tax. However, to determine the unified credit used against the estate tax, you must complete Form 706.taxmap/pubs/p950-002.htm#TXMP6d712241
An estate tax return, Form 706, must be filed if the gross estate, plus any adjusted taxable gifts and specific gift tax exemption, is more than the filing requirement for the year of death.
Adjusted taxable gifts is the total of the taxable gifts you made after 1976 that are not included in your gross estate. The specific gift tax exemption applies only to gifts made after September 8, 1976, and before 1977. taxmap/pubs/p950-002.htm#TXMP737b3291
The following table lists the filing requirement for the estate of a decedent dying after 2001.
|Year of Death:||Filing|
|2002 and 2003||1,000,000|
|2004 and 2005||1,500,000|
|2006, 2007, and 2008||2,000,000|
If you think you will have an estate on which tax must be paid, or if your estate will have to file an estate tax return even if no tax will be due, see Publication 559, Form 706, Form 706-NA, and the forms' instructions for more information. You can get publications and forms from the IRS website at www.irs.gov. You (or your estate) may want to get a qualified estate tax professional to help with estate tax questions.