An Overview of Estate Tax Returns

  • Robert S. Thomas,
  •   Estate Planning, Taxation
  •   Comments Off on An Overview of Estate Tax Returns


Whether you are estate planning or trying to petition an estate through a probate court, taxes are constantly at the forefront of your thoughts. Estate taxes are taxes collected on the transfer of a deceased person’s estate. There is a federal estate tax levied by the IRS, and there are several states that collect an additional state estate tax. Unfortunately, Illinois is one of those few states.


Federal Estate Tax


Unless the Trump Administration and Congress successfully overhaul the tax code in the foreseeable future, you should continue to plan your estate with federal estate taxes in mind. Or if you are the executor or administrator of an estate, know that you are required to file an estate tax return (IRS Form 706) within nine months of the date of death if the gross value of the estate exceeded $5.45 million in 2016 or $5.49 million in 2017. That number represents the estate tax exemption, meaning if the will’s decedent died in 2016, the first $5.45 million is not subject to a federal estate tax. Pay attention to that number, as it adjusts for inflation each year.


Calculating the gross value of the estate takes some work and expertise, as it involves calculating the taxable value of all property in the estate, identifying qualifying deductions, and applying credits. You must also be thorough in providing all necessary documentation to support your numbers. Because of the complexities of the estate tax return and the importance of getting it right, I would suggest consulting with a tax attorney.


Illinois Estate Tax


Illinois requires the filing of an estate tax return (Form 700) separate from the IRS return. Notably, the Illinois form allows the preparer to attach and reference the federal estate tax return. The estate tax exemption in Illinois is a gross value of $4 million. You will notice that this is a different exemption amount than the federal exemption. This is because the IRS’ exemption is adjusted annually based on inflation, where the smaller state exemption in Illinois is fixed. The result of this is that estates with a net value between $4 million and $5.49 million may have to pay an Illinois estate tax while being exempt from the federal tax.


Preparing state and federal estate tax returns is complex with a many moving parts. I have successfully handled estates of all sizes and complexities. I can advise you on estate tax advantages and managing an estate in a way that maximizes the amount of money that is transferred to heirs. My team and I are hard working, ethical, and detail-oriented and want to help. Call us at the Law Offices of Robert S. Thomas at 847-392-5893 or visit our website to set up a consultation.

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