topic federal estate taxation in Get your taxes done using TurboTax

federal estate taxation

shugs23 — Thu, 01 Apr 2021 12:06:29 GMT

I am trying to understand how this works specifically, if the rules are cut back to the 2009 levels where the exemption is 3,5 million ( or worse if Biden has his way). Let's suppose hypothetically, a married couple has an estate valued at 6 million, which consists of 5.5 million in an IRA and 500,000 house value. Now, suppose one spouse dies. As I understand it, there is no estate tax considerations because the surviving spouse will inherit the IRA and house tax -free ( assuming beneficiary designation has been set in the IRA). First question : are there any special tax forms that would have to be filed due to the first spouse death, other than the regular 1040 ? Now suppose a couple years later the second spouse dies with the 6 million dollar estate and suppose the federal exemption has been reduced to 3.5 million. This would mean that the excess over 3.5 will be subject to estate tax which would rapidly grade up to almost 50%. Here is where I want to understand what the process is for the executor to follow. What are the specific tax forms that he/she would have to fill out? Would a 1040 have to be filed for the deceased spouse? Thank you

Re: federal estate taxation

SweetieJean — Thu, 01 Apr 2021 12:59:05 GMT

Your question is really beyond the scope of this forum, which deals with Income taxes, not Estate taxes.

And do not confuse federal Estate taxes (form 706) with Estate Income taxes (form 1041).

Re: federal estate taxation

Anonymous_ — Fri, 02 Apr 2021 01:24:03 GMT

@shugs23 wrote:

.....are there any special tax forms that would have to be filed due to the first spouse death, other than the regular 1040 ?

Yes. The DSUE is elected on Form 706.

See https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-estate-taxes