Yes the Estate Tax of the United States, popularly referred as the ‘Death Tax’ has bounced back in the scene. The Estate Tax law has been in force since 1916, but under the George Bush-led administration and under new tax law signed in 2001, a new structure of tax rates and exemptions was introduced. The estate tax rates continued at 55 percent until the year 2009, however, with variations of exemptions, but the federal tax was expired in 2010.
US Estate tax is referred to a death tax as it is levied on inheritance after a person dies. Assets owned by a deceased at the time of his death which may include real estate, bank accounts, vehicles, life insurance policies, stocks and bonds, employee benefits, retirement assets and other investments are considered taxable assets after his death. Until 2009, the rate at which these assets were taxed was 55 percent. All tax residents in the US, including immigrant tax residents are liable to pay the tax. The year 2010 was an exception when if people died their heirs were not subject to pay the estate tax. This New Year, the tax regime is back and this has created anxiety among the Americans.
However, a little difference between the tax rates of 2011 and those of the years till 2009 (since 2001) carries a relief for the US residents and citizens. The new estate tax rule passed by the Obama administration imposes a levy up to 35 percent on estates valued beyond 5 million dollars. In other words, the first 5 million dollars of any deceased’s assets is exempted or tax-free, while all the value beyond that is taxed at 35 percent. Even though the new tax rate is somewhat lower than that of the previous tax-bound years, it is still a matter of concern for Americans. However, the new administration’s figure was far better than what people expected. US residents expected that the estate tax would reoccur at 55 percent with a low exemption of only 1 million dollar.
Tax system information is one such aspect that people should acquire when they decide to immigrate to a new country. Having been known that the US has one complex tax system, it is important for prospective immigrants to take note of the details of the system before they land up at the country. An Immigration and Visa consultant is someone who can help you in this regard. For immigration related assistance, mail us at ajay@abhinav.com and get free-of-charge assessment for immigration to countries like the UK, Australia, Canada and New Zealand!
