Are There Taxes Owed on Assets in a Florida Probate Estate?
As the saying goes, there are only two certainties in life: death and taxes. Unfortunately, these two certainties often come at the same time. When a person dies, their estate goes through probate and often incurs taxes.
The good news is that only 17 states have an estate tax. If you live in Florida, you will be happy to know that this state does not. So, on the state side, you will not owe any taxes when your loved one dies. This makes the grieving process much easier. You do not have to worry about state estate taxes during this difficult time.
However, the federal government is a different story. You may have to pay the IRS if your estate is valued over a certain amount. However, it is a very high amount that likely will not apply to you. Currently, the federal estate tax exemption is $13.61 million. For married couples, it is double that amount, or $27.22 million. What this means is that estates valued under these amounts are not subject to federal estate taxes. If an estate is valued above that amount, any excess (not the entire estate amount) will be taxed at a rate of up to 40%.
That can add up. So, if you are a single person and your estate is valued at $14.61 million, that extra $1 million is subject to estate tax. You could potentially owe $400,000.
Filing Taxes
When a person dies, there are two significant tax consequences involved. It ends the deceased person’s last tax year for purposes of filing the decedent’s federal income tax return, and it establishes a new tax entity: the estate.
The executor of the estate may be required to file one or more of the following returns:
- A final Form 1040, U.S. Individual Income Tax Return, reporting the decedent’s income for the year they died
- Form 1041, U.S. Income Tax Return for Estates and Trusts, reporting the estate’s taxable income
- Form 709, U.S. Gift Tax Return, reporting gifts made by the decedent before they died
- Form 706, U.S. Estate Tax Return, reporting the decedent’s gross estate
The executor is responsible for paying the amounts owed by the estate to the IRS. Taxes are normally paid from probate assets in the decedent’s estate, not from the executor’s personal assets.
Contact Our West Palm Beach Probate Attorney Today
The last thing you want to worry about after a loved one’s death is taxes. Fortunately, Florida does not levy taxes on probate estates, but the federal government does for larger multi-million-dollar estates.
The probate process can be complicated, as the laws vary from state to state. Get the help you need from West Palm Beach probate attorney Brian K. McMahon, P.A. Our compassionate, empathetic attorneys understand how difficult of a time it is right now and will work to ensure your rights are protected. Schedule a consultation today by calling (561) 658-1789 or filling out the online form. We serve the West Palm Beach, Boca Raton, Port St. Lucie, and South Florida areas.