Last week the IRS reported that less than 15,000 estates owed federal estates for the 2009 tax year, down from 17,000 in 2008. This is in sharp contrast to the 52,000 estates that were taxed in 2001.
Well, it doesn't take a rocket scientist to figure out why there has been a significant decrease in the number of estates owing federal estate taxes during the past eight years - this is because the amount that is exempted from federal estate taxes has gradually increased from $675,000 to $3.5 million. In fact, the federal estate tax exemption increased from $2 million to $3.5 million between 2008 and 2009 alone - a whopping $1.5 million spread - which clearly explains why over 2,000 less estates owed estate taxes in 2008 versus 2009.
Of course, with the federal estate tax repealed for the 2010 tax year, no estates will owe federal estate taxes this year, but the tax is scheduled to come back on January 1, 2011 with only a $1 million exemption. So look for the number of estates that owe estate taxes to increase significantly for the 2011 tax year when compared with the 2009 tax year - at least 52,000 as mentioned above if 2001, a year when the estate tax exemption was $1 million, can be used as an indicator.
- ABC News reports - U.S. Says Numbers of Rich Paying Estate Tax Drops
- What is the Federal Estate Tax?
- Overview of Current Federal Estate Tax Laws
- When is a Federal Estate Tax Return Required to be Filed?
- What is the Future of the Federal Estate Tax?
- How to Calculate Your Estate Tax Liability in 2011
- How to Reduce or Even Eliminate Your Estate Tax Bill