"Federal Taxes"

Both the federal and many state governments in the United States, including New Jersey, assess an estate tax upon transfer of a deceased person’s assets. Thus, while it is often begrudgingly referred to as a “death tax,” it is actually a type of transfer tax which is imposed upon the transfer of the property in the taxable estate of every decedent (the deceased) who was a citizen or resident of the United States.

The “taxable estate” can be calculated by subtracting permitted deductions from the gross estate. The “gross estate” includes the value of all property that the decedent had an interest in at the time of her death. The gross estate may also include any interest in the estate as dower or curtesy (an amount promised by one spouse to another in the event of death), items that the decedent transferred in the three years prior to death which were not sold for value or excluded as gifts, certain property that the decedent transferred but retained a life estate in, the value of property in which the decedent had a reversionary interest in excess of five percent of the property value, annuities, some jointly owned property, powers of appointment, and some life insurance policies, among other things.

Some common deductions from the gross estate, which are used to calculate the total “taxable estate,” may include funeral expenses, estate administration expenses, claims against the estate, some unpaid mortgages, certain charitable contributions, property or bequests left to the surviving spouse, interest in a qualified family-owned business, and state estate or inheritance taxes.
Continue reading

On the federal level, income taxes, and indeed all taxes to some extent, are regulated and enforced by the Internal Revenue Service (“IRS”). While there are numerous statutes, regulations, and other laws which mandate the payment of taxes on any number of goods, services, and activities, the tax bible is the Internal Revenue Code (“IRC”). The IRC has been further expanded upon and interpreted in the regulations adopted by the United States Department of the Treasury located in Title 26 of the Code of Federal Regulations (“CFR”). The IRS also issues numerous publications in an attempt to provide further guidance for people, companies, and tax professionals, typically referred to as Internal Revenue Bulletins (“IRB”).

Oftentimes people frustrated with paying income taxes, while pulling their hair out or throwing their hands up, wonder if there is some way they can avoid the tax altogether. They might start devising some strategy to argue against the very concept of paying income taxes. However, rest assured, the power of the government to enforce the payment of income taxes is legal and valid, and its not going away.

Indeed, the very first section of the IRC imposes tax on income. The IRC goes on to define taxable income as gross income after permissible deductions are subtracted, and requires everyone (with limited exceptions) to file their tax returns every year. However, when calculating personal income taxes, there are certain ways that a taxpayer may make deductions upon the tax that they would otherwise owe. In doing so, people may either itemize their deductions or accept the “standard deduction.”
Continue reading

Articles Tagged with “Federal Taxes”

Death Taxes: Estate and Inheritance Taxes

Permissible Tax Deductions