NOTE: State laws change frequently and the following information may not reflect recent changes. For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice.
If you live in New York, then you live in one of a handful of states that still collects a state estate tax. The estates of New York residents, as well as the estates of nonresidents who own real estate and/or tangible personal property located in New York, are subject to a state estate tax under the following guidelines for deaths that occurred prior to April 1, 2014.
Refer to Overview of New York Estate Tax Laws: April 1, 2014 to March 31, 2015 for information regarding deaths that occur between those dates.
For deaths occurring on or after April 1, 2015, the New York estate tax exemption will be increased on an annual basis until it equals the federal estate tax exemption in 2019. Refer to Overview of Changes to the New York Estate Tax Exemption Between 2014 and 2019 for a summary of the annual adjustment to the New York exemption that will be made in future years.
When is an estate subject to the New York estate tax?
For New York residents who die on or before March 31, 2014, an estate may be subject to the New York estate tax if the total of the federal gross estate, plus the federal adjusted taxable gifts and specific exemption, exceeds $1,000,000.
For nonresident U.S. citizens who die on or before March 31, 2014, an estate may be subject to the New York estate tax if it includes real estate or tangible personal property having a situs within the state of New York and the gross estate, plus federal adjusted taxable gifts and specific exemption, exceeds $1,000,000.
For nonresident, non-U.S. citizens, an estate may be subject to the New York estate tax if it includes real or tangible personal property having a situs within the state of New York and the estate is required to file a federal estate tax return (Form 706-NA).
What New York estate tax forms must be filed?
Each estate that may be subject to the New York estate tax as described above must file a Form ET-706, New York State Estate Tax Return.
The estate of a nonresident must also file Form ET-141, New York State Estate Tax Domicile Affidavit.
Aside from these New York forms, the starting point for Form ET-706 is the federal estate tax return, IRS Form 706. Thus, a completed IRS Form 706 (or IRS Form 706-NA for a noncitizen, non-U.S. resident) with all schedules and supporting documents must be completed and submitted with New York Form ET-706 even if the estate is not required to file a federal estate return.
Are transfers to a surviving spouse taxable?
Outright transfers to a surviving spouse are not taxable.
For married couples who have used AB Trust planning to reduce their federal estate tax bill, a New York estate tax may be due on the B Trust after the first spouse's death due to the gap of $4,340,000 between the New York estate tax exemption of $1,000,000 and the 2014 federal estate tax exemption of $5,340,000. A married decedent's estate is not authorized to make an election on Form ET-706 to treat property as marital deduction qualified terminable interest property ("QTIP"). What this means is that married couples cannot defer payment of both New York estate taxes and federal estate taxes until after the death of the surviving spouse using an ABC Trust scheme.
When is the New York estate tax return and any payment required due?
Form ET-706 must be filed and any tax due must be paid within nine months after the decedent’s date of death unless an extension of time to file the return and pay the tax is received.
An extension of time to pay the estate tax for up to four years from the date of death may be granted if it is established that payment of any part of the tax within nine months from the date of death would result in undue hardship to the estate, but annual installments may be required. Extensions of time to file the return, pay the tax, or both, are requested on Form ET-133.
Where is the New York estate tax return filed?
Mail the New York estate tax return, Form 706-ET, and all other required forms to:
NYS Estate Tax Processing Center
P.O. Box 15167
Albany, NY 12212-5167
What is the New York estate tax rate?
The New York estate tax rate is a progressive one that starts at 5.085% and rises to 16% for the amount above $10,040,000.
Where can I find additional information about New York estate taxes?
For more information about New York estate taxes, refer to the New York Department of Taxation and Finance website.