TurboTax / Tax Calculators & Tips / All Tax Guides / Tax Planning and Checklists / Video: What Are Estate Taxes?

Video: What Are Estate Taxes?

Updated for Tax Year 2011


OVERVIEW

Note: The content of this video applies only to the years 2010 and earlier. It is included here for reference only.

The estate tax generally affects only the top two percent of the wealthiest individuals and was never intended to apply to the average taxpayer.  However, here's how it works. 


Note: The content of this video applies only to the years 2010 and earlier. It is included here for reference only.

Hello, I'm Sara from TurboTax, with some information about the estate tax. It's hard enough dealing with the loss of a loved one without having to worry about paying more taxes, but the good news is most of you will never have to deal with the estate tax. The estate tax generally affects only the top two percent of the wealthiest individuals and was never intended to apply to the average taxpayer.

However, here is how it works:

When a taxpayer passes away the government looks at the amount of property and money that a person leaves to their heirs. Each year the government determines the value of this property which can be passed on without having to pay estate taxes on it. The amount changes from year to year but it generally ranges from one million dollars to 3.5 million dollars. These high exclusion amounts ensure that most Americans never have to worry about the estate tax.

However, if you think that the estate tax might apply to you there are many things you can do to prepare and avoid it. Often times, you can donate a portion of your wealth to your favorite charity to reduce the value of your estate or leave everything you own to a spouse. Luckily the estate tax law permits a spouse to inherit all of your property without any tax consequences.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Start for Free

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • Filing Deadline: IRS filing deadline for tax year 2015 is April 18, 2016 (except for residents of Massachusetts or Maine, where the IRS filing deadline for tax year 2015 is April 19, 2016).
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected 3/18/16. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected 3/18/16. Prices subject to change without notice.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except the TurboTax Home & Business/QuickBooks Self-Employed bundle offers.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice service is available via phone for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2014 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.