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New York City Estate Tax Returns

Understanding and managing estate tax returns is a necessary component in estate planning and administration, particularly if you are located in New York. With its unique laws and regulations regarding estate taxes and the filing of estate tax returns, navigating these legal obligations can be a daunting process.

Holm & O’Hara LLP’s attorneys specialize in assisting clients with the preparation and filing of New York estate tax returns, ensuring compliance with both state and federal regulations while minimizing tax liabilities.

Do You Need to File an Estate Tax Return?

If you are a close family member of the deceased, an executor, or estate administrator tasked with handling the final affairs of someone who has passed, you may be required to file an estate tax return. Filing an estate tax return is not always legally required. Determining whether you need to file a federal estate tax return or an estate tax return in New York hinges on several factors.

Federal estate tax currently applies to estates worth $13.61 million or more. However, this amount changes each year. If an estate is subject to federal estate tax, you will need to file Form 706, a federal estate tax return, on behalf of the estate. This is in addition to any income tax returns that need to be filed, such as Form 1040 for the deceased’s final personal income tax return or Form 1041 for the estate’s income tax.

In addition to federal estate tax, domiciliaries of New York State may be required to file a state estate tax return if the total value of the gross estate exceeds the tax exclusion amount, which, for 2024, is $6,940,000. The gross estate includes real property, brokerage accounts, personal property, life insurance, etc. and certain taxable gifts made within three years before the date of death. Additionally, if the estate owes any federal estate tax, a New York State estate tax return will likely be required, irrespective of the estate’s value.

How to File an Estate Tax Return

Filing an estate tax return in New York is a multi-step process that requires careful attention to detail to ensure accuracy and compliance with state laws.

Step 1: Determine the Gross Estate

The first step in filing an estate tax return is to determine the gross estate’s total value. This involves compiling a comprehensive list of all assets belonging to the decedent at the time of their death and, where applicable, appraisals for such assets. Assets to consider include real estate, life insurance proceeds, tangible personal property, financial assets, and shares in businesses or partnerships.

Step 2: Calculate the Taxable Estate

After determining the gross estate, the next step is to calculate the taxable estate. This is done by applying various deductions to the gross estate. These deductions can include debts and liabilities, funeral and administration expenses, and a marital deduction if there is a surviving spouse.

Step 3: Assess Exemption and Tax Rate

The taxable estate is then assessed against the New York State exemption amount. If the estate’s value exceeds this exemption threshold, it is subject to estate tax. The estate tax rate applied depends on the value of the estate exceeding the exemption amount.

Step 4: File the Return

Finally, the appropriate forms for the New York State estate tax return must be completed and submitted. This filing typically needs to be done within nine months of the decedent’s passing. The return should include completed tax forms supporting documentation such as appraisals of property, statements of account balances, and documentation of debts and liabilities; and arrangements for payment of any taxes owed.

The Role of an Attorney in Estate Tax Returns

Navigating estate tax returns requires a thorough understanding of both federal and state tax laws. An experienced estate attorney can play a crucial role in this process. They can offer expert guidance on the legal intricacies of estate taxes, help accurately calculate the tax owed, and ensure all appropriate deductions and exemptions are applied. An attorney can also assist in gathering the necessary documentation, completing the tax forms, and dealing with any issues that may arise with the Internal Revenue Service (IRS) and other tax authorities.

Work with an Experienced Trusts and Estates Attorney

Dealing with estate tax returns and the payment of appliable estimated estate taxes can be a daunting task, especially during a period of grief. Working with an experienced New York City trusts and estates attorney can relieve much of the stress and uncertainty associated with these legal obligations. Holm & O’Hara LLP provides comprehensive support in preparing and filing estate tax returns, ensuring that every aspect of your or your loved one’s estate is handled with the utmost care, specialized attention, and professionalism.

For white-glove assistance with estate tax returns in New York City, contact us today. Our team of knowledgeable attorneys is equipped to guide you through every step of the estate tax return process, ensuring compliance and peace of mind throughout the process.

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