Federal Estate and Gift Tax

The United States government imposes a tax on transfers that are made between two individuals.  When you give someone a gift (i.e. anything that you do not get paid for) the government is allowed to tax the transfer.  Estate and Gift taxation is an extremely complex area of tax.  There are many laws that allow certain types of gifts to be made without causing an actual tax to be payable.  Due to the complexity of these rules it is advisable that you contact our office to discuss any future gifting.

• Estate Tax Return – Form 706
  Upon the death of any individual the estate (or executor) is required to file a tax return with the Internal Revenue Service within 9 months of the date of death.  There is not usually tax due and payable on estates that are below a certain amount of value, but it is still advisable to file an Estate Tax Return (Form 706) in order to obtain the approval from the Internal Revenue Service (IRS) that you do not owe tax and that the values that you have placed on the items in the estate are correct.  If you choose not to file it could expose the estate and beneficiaries of the estate to future attack by the IRS claiming, at a future time, that you did owe tax and charge penalties and interest for failure to not only pay, but failure to file. 
  
• Gift Tax Return – Form 709
  When a transfer is made between two individuals that is intended to be a gift the Internal Revenue Service requires the filing of a Gift Tax Return.  A Gift Tax Return is not always required when a gift is made, therefore, it is prudent that a person making a gift inquire whether their transfer will require the filing.