When an individual dies, not all of the estate is passed onto the heirs. Instead, in many cases, as much as half the estate will pass onto the state and federal tax man.
Under federal laws, the estate tax is somewhat lenient -- individuals can generally bequeath up to $5 million of their assets tax free. But just because you don't own $5 million in assets, does not mean you will avoid the tax man completely. Instead, New Yorkers must file state estate taxes even if they meet a far lower threshold.
The following are three questions often asked about the New York Estate tax.
1. Do I have to file for New York estate tax?
An estate is required to file a New York State estate tax return if the total of the federal gross estate plus the federal adjusted taxable gifts and specific exemption exceeds $1 million (you may want to speak with an estate planning attorney to determine if you meet this threshold). In addition, the individual must either be a resident of the state at time of death or a non-resident with real or personal property in the state.
For non-residents and non-citizens of the U.S., an estate may also have to file an estate tax return if the estate includes real or personal property located in the state that exceeds the filing limit of $60,000 minus some exemptions.
2. When do I have to file for New York estate tax?
Estates must file and pay the estate tax within nine months after the decedent's date of death. You must file both the federal estate tax form along with state estate tax form. In some cases, you can seek an extension to file and pay the tax.
3. How much tax do I have to pay?
There is no easy answer to this question. How much you pay is determined on a case-by-case basis using the graduated rate schedule that can range from 18% of the taxable estate to 55% of the estate.
Determining whether you owe New York estate tax and how much you owe can be a complicated calculation. To help you make this determination, you may want to speak with an estate planning attorney.