NEW YORK TO CONSIDER REVAMPING ITS ESTATE TAX
December 14, 2013
By: Robert G. McDermott, Esq.
Email: bob@mcdermottlaw.com
In a December 2013 report, the New York State Tax Relief Commission is suggesting changes to New York State’s estate tax.
The proposal would not eliminate the New York Estate Tax completely. Rather, the proposed revisions would lower top estate tax rates, and provide a much higher exemption which would basically match the new permanent federal estate tax exemption, indexed for inflation.
Currently, New York exempts only the first $ 1 million from estate tax. The federal estate tax exemption is $ 5.25 million in 2013, rising to $5.34 million in 2014 (indexed for inflation).
The proposal recommends that the New York estate tax exemption be amended to match
the federal estate tax exemption. So, if the proposal were enacted into law, the estate of an individual with a net worth of $ 5.34 million (the federal estate tax exemption amount in 2014) would owe no New York state estate tax. Under the proposal, the top tax rate on amounts above that would be lowered from 16% to 10%.
If the proposal is passed, the $5.34 million estate (in 2014) would be free of both federal and New York state estate tax. Currently, an estate of $ 5.34 million would owe a bit over $ 430,000 in New York state estate tax.
If the proposal is enacted into law, it would eliminate one reason for successful New Yorkers to permanently relocate outside of New York, says the report.
The proposal may be considered in Albany in the 2014 legislative session. If New York acts on the proposal, that would make New York a more estate tax-friendly place to die than Connecticut or New Jersey: Connecticut has a $2 million exemption (and a gift tax), and New Jersey has a $675,000 exemption (and a separate inheritance tax).
A copy of the New York State Tax Relief Commission report is at the following web site:
http://www.governor.ny.gov/assets/documents/commission_report.pdf
We will monitor further developments.
Robert G. McDermott, Esq.
McDermott Law Offices
110 Marcus Boulevard
Suite 300
Hauppauge, New York 11788
Tel. 631-414-0094
Fax 631-414-0098
Email: bob@mcdermottlaw.com
Web: www.mcdermottlaw.com
Copyright © - Robert G. McDermott
IRS Circular 230 Disclosure Notice: The information herein is not intended or written to be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax authority.
This Blog may be considered attorney advertising.
Friday, December 13, 2013
Tuesday, April 16, 2013
IRA's AND OTHER RETIREMENT ACCOUNTS TO BE CURTAILED UNDER OBAMA's 2014 BUDGET ?
Are there potential big changes coming to retirement planning ? Maybe.
The Wall Street Journal reported in its April 14, 2013 online edition that within President Barack Obama's budget for fiscal year 2014, are proposed changes that would impact Individual Retirement Accounts (IRA's) and other tax deferred savings plans, including 401(k) plans.
The proposal to put a lifetime cap on savings in individual retirement accounts and other tax-deferred retirement-savings vehicles, including 401(k) plans and corporate profit-sharing plans is getting attention.
Also, the favorable IRA "Stretch Out" distributions for the beneficiaries of an IRA owner may be curtailed. Under current rules, people who inherit IRAs can "stretch" their withdrawals across their life expectancies, paying income tax only on the amounts they remove from the account and continuing the tax deferral on any earnings inside. Obama's budget proposal would force heirs (other than surviving spouses) to empty such retirement accounts within five years, accelerating payment of taxes due. The Wall Street Journal indicates that billions in additional governmental review would be generated by eliminating "Stretch Out" distributions.
We will update our blog with any future developments on this.
Robert G. McDermott, Esq.
McDermott Law Offices
110 Marcus Boulevard, Suite 300
Hauppauge, New York 11788
Tel. 631-414-0094
Fax 631-414-0098
Email: bob@mcdermottlaw.com
Web: www.mcdermottlaw.com
IRS Circular 230 Disclosure Notice: The information herein is not intended or written to be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax authority.
This Blog may be considered attorney advertising.
Are there potential big changes coming to retirement planning ? Maybe.
The Wall Street Journal reported in its April 14, 2013 online edition that within President Barack Obama's budget for fiscal year 2014, are proposed changes that would impact Individual Retirement Accounts (IRA's) and other tax deferred savings plans, including 401(k) plans.
The proposal to put a lifetime cap on savings in individual retirement accounts and other tax-deferred retirement-savings vehicles, including 401(k) plans and corporate profit-sharing plans is getting attention.
Also, the favorable IRA "Stretch Out" distributions for the beneficiaries of an IRA owner may be curtailed. Under current rules, people who inherit IRAs can "stretch" their withdrawals across their life expectancies, paying income tax only on the amounts they remove from the account and continuing the tax deferral on any earnings inside. Obama's budget proposal would force heirs (other than surviving spouses) to empty such retirement accounts within five years, accelerating payment of taxes due. The Wall Street Journal indicates that billions in additional governmental review would be generated by eliminating "Stretch Out" distributions.
We will update our blog with any future developments on this.
Robert G. McDermott, Esq.
McDermott Law Offices
110 Marcus Boulevard, Suite 300
Hauppauge, New York 11788
Tel. 631-414-0094
Fax 631-414-0098
Email: bob@mcdermottlaw.com
Web: www.mcdermottlaw.com
IRS Circular 230 Disclosure Notice: The information herein is not intended or written to be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax authority.
This Blog may be considered attorney advertising.
Wednesday, January 02, 2013
FISCAL CLIFF LEGISLATION AND ESTATE TAX RELIEF
FISCAL CLIFF LEGISLATION PROVIDES PERMANENT ESTATE TAX RELIEF
According to summaries being reported thus far, the Fiscal Cliff legislation that passed on January 1, 2013 will implement permanent estate tax relief.
Federal Estate Tax will not be required on inheritances of up to Five Million ($ 5,000,000) Dollars. Married couples may be permitted to add their exemptions together, to avoid paying tax on inheritances less than Ten Million ($10,000,000) Dollars.
For any additional value over the excluded amounts, a 40% estate tax is applicable.
Estate-tax policy has been in flux since 2001, when the Bush tax cuts were enacted. They called for higher levels of exemptions and lower tax rates to be phased in over ten years, with the estate tax totally eliminated in 2010, and being restored to pre-2001 levels at the end of 2012.
Without last night's deal, a 55% estate tax would have been applied to all inheritances above One Million ( $1,000,000) Dollars.
We will continue to monitor the final details of this legislation, and update accordingly.
________________________________
Robert G. McDermott, Esq.
McDermott Law Offices
110 Marcus Boulevard
Suite 300
Hauppauge, NY 11788
Tel. 631-414-0094
Fax 631-414-0098
E-mail: bob@mcdermottlaw.com
Internet: www.mcdermottlaw.com
____________________________
The information transmitted herewith is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited.
IRS Circular 230 Disclosure Notice: The written advice in this e-mail and any attachments is not intended or written to be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax authority.
This Blog may be considered attorney advertising.
According to summaries being reported thus far, the Fiscal Cliff legislation that passed on January 1, 2013 will implement permanent estate tax relief.
Federal Estate Tax will not be required on inheritances of up to Five Million ($ 5,000,000) Dollars. Married couples may be permitted to add their exemptions together, to avoid paying tax on inheritances less than Ten Million ($10,000,000) Dollars.
For any additional value over the excluded amounts, a 40% estate tax is applicable.
Estate-tax policy has been in flux since 2001, when the Bush tax cuts were enacted. They called for higher levels of exemptions and lower tax rates to be phased in over ten years, with the estate tax totally eliminated in 2010, and being restored to pre-2001 levels at the end of 2012.
Without last night's deal, a 55% estate tax would have been applied to all inheritances above One Million ( $1,000,000) Dollars.
We will continue to monitor the final details of this legislation, and update accordingly.
________________________________
Robert G. McDermott, Esq.
McDermott Law Offices
110 Marcus Boulevard
Suite 300
Hauppauge, NY 11788
Tel. 631-414-0094
Fax 631-414-0098
E-mail: bob@mcdermottlaw.com
Internet: www.mcdermottlaw.com
____________________________
The information transmitted herewith is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited.
IRS Circular 230 Disclosure Notice: The written advice in this e-mail and any attachments is not intended or written to be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax authority.
This Blog may be considered attorney advertising.
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