As you know, Congress passed a bill, which was signed by President Obama, which increased the lifetime federal estate tax exemption amount to $5 million dollars. In addition, Congress added a portability provision, which meant that if the spouse died first and did not use the entire amount at his or her death, that the balance of that amount could be used by the surviving spouse at his or her death. This portability provision does not work in the event that the surviving spouse remarries. That surviving spouse only receives the remainder of the second spouse's exemption.
You need to contact the IRS and make a payment arrangement to cover any unpaid back taxes owed. It might be helpful for you to go ahead and file your taxes for the year 2010 to find if you owe. That way, when you contact the IRS for unpaid back taxes, you can include current year debt with what you owe for previous years as well.
However, amending tax returns is not always a cost-saving strategy proactively sought by taxpayers and the professionals helping them. Sometimes this process is initiated by the IRS. Below are some of the essential facts on amended tax returns.
The 1040X, 941X and 1120X If a client has improperly filed a 1040, 1040A, or 1040EZ tax return, and the error is deemed to be serious, the client must first file a 1040X with the correction. If the client has made a number of errors over the course of several years, the client is required to file a 1040X return for each year in question. The same rule would apply to clients who make substantial errors on Form 941 payroll tax forms or Form1120 corporate tax forms. In these scenarios, the taxpayer will must file a 941X or 1120X to correct the error or errors. The format of these amended returns is simple. The taxpayer must put the original return income, deduction and credit figures in the first column and the amended figures in a separate column. An explanation of the new figures must accompany this form.
This may mean that the surviving spouse's unfettered access to the assets in the trust will be somewhat limited. In many cases, there is a trustee other than the spouse who handles the principal distributions from the family trust, so the surviving spouse has to ask another trustee for principal distributions. This may or may not be the optimal solution for the estate plan for this size estate.
As a result, the estate plans that have been drafted in the past need to be reviewed to determine the goals of the family and determine if they are met under the circumstances. For a smaller estate, where the husband and wife each have full control of the assets, it may be simpler to do one joint trust, rather than separate trusts for the husband and wife. This is simple to understand and easy to use.
The amount that you need to pay on unpaid taxes will depend on how much you will be charged in penalties and fines. Some of those penalties can be forgiven, if you can show just cause why you were unable to pay your taxes in a timely fashion. It is possible to make payment arrangements on what you owe on any unpaid taxes.
IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
You need to contact the IRS and make a payment arrangement to cover any unpaid back taxes owed. It might be helpful for you to go ahead and file your taxes for the year 2010 to find if you owe. That way, when you contact the IRS for unpaid back taxes, you can include current year debt with what you owe for previous years as well.
However, amending tax returns is not always a cost-saving strategy proactively sought by taxpayers and the professionals helping them. Sometimes this process is initiated by the IRS. Below are some of the essential facts on amended tax returns.
The 1040X, 941X and 1120X If a client has improperly filed a 1040, 1040A, or 1040EZ tax return, and the error is deemed to be serious, the client must first file a 1040X with the correction. If the client has made a number of errors over the course of several years, the client is required to file a 1040X return for each year in question. The same rule would apply to clients who make substantial errors on Form 941 payroll tax forms or Form1120 corporate tax forms. In these scenarios, the taxpayer will must file a 941X or 1120X to correct the error or errors. The format of these amended returns is simple. The taxpayer must put the original return income, deduction and credit figures in the first column and the amended figures in a separate column. An explanation of the new figures must accompany this form.
This may mean that the surviving spouse's unfettered access to the assets in the trust will be somewhat limited. In many cases, there is a trustee other than the spouse who handles the principal distributions from the family trust, so the surviving spouse has to ask another trustee for principal distributions. This may or may not be the optimal solution for the estate plan for this size estate.
As a result, the estate plans that have been drafted in the past need to be reviewed to determine the goals of the family and determine if they are met under the circumstances. For a smaller estate, where the husband and wife each have full control of the assets, it may be simpler to do one joint trust, rather than separate trusts for the husband and wife. This is simple to understand and easy to use.
The amount that you need to pay on unpaid taxes will depend on how much you will be charged in penalties and fines. Some of those penalties can be forgiven, if you can show just cause why you were unable to pay your taxes in a timely fashion. It is possible to make payment arrangements on what you owe on any unpaid taxes.
IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
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