Extension

Article Dean Dorton

Effective June 9, 2017, Revenue Procedure 2017-34 provides a simplified method whereby certain estates can obtain an extension of time to make an estate tax portability election. The simplified method is only available to estates that are not required to file an estate tax return based on the value of the gross assets in the estate.

History
Each individual is permitted a lifetime exemption (currently $5,490,000) from estate and gift taxes. At death, any unused exemption can be transferred to one’s surviving spouse to be added to the spouse’s own exemption. Simply put, this portability election allows a married couple to transfer nearly $11 million of assets without being subject to estate or gift taxes.

In addition to computing the amount of a decedent’s unused exemption available, the basic requirement for the portability election is that an estate tax return be filed within the time prescribed by law (including extensions). Estate tax returns are typically due nine months after the date of death and estates may obtain an automatic six-month extension. In order to elect portability, estate tax returns must be filed by estates that are not otherwise required to file based on the value of the gross assets in the estate.

Since December 31, 2014, the IRS has issued numerous letter rulings granting extensions of time to elect portability in situations where the decedent’s estate was not otherwise required to file an estate tax return. These requests have placed a significant burden on the IRS; therefore, the simplified method was created to ease this strain.

Requirements
In order for the simplified method to apply, the estate needs to meet the following requirements:

  • Decedent was a U.S. citizen or resident who died after December 31, 2010
  • The estate was not required to file an estate tax return based on the value of the gross estate
  • The estate did not file an estate tax return within the time prescribed

If these conditions are met, the estate will now have until either January 2, 2018 or two years from the decedent’s date of death (whichever occurs later) to file an estate tax return and elect portability.

If you have any questions, contact Faith Crump at fcrump@deandorton.com or Elizabeth Leatherman at eleatherman@deandorton.com.

Article Dean Dorton

While April 15 (April 18 this year) is the main tax deadline on most individual taxpayers’ minds, there are others through the rest of the year that are important to be aware of. To help you make sure you don’t miss any important 2017 deadlines, here’s a look at when some key tax-related forms, payments and other actions are due. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you.

Please review the calendar and let us know if you have any questions about the deadlines or would like assistance in meeting them.

June 15

  • File a 2016 individual income tax return (Form 1040) or file for a four-month extension (Form 4868), and pay any tax and interest due, if you live outside the United States.
  • Pay the second installment of 2017 estimated taxes, if not paying income tax through withholding (Form 1040-ES).

September 15

  • Pay the third installment of 2017 estimated taxes, if not paying income tax through withholding (Form 1040-ES).

October 2

  • If you’re the trustee of a trust or the executor of an estate, file an income tax return for the 2016 calendar year (Form 1041) and pay any tax, interest and penalties due, if an automatic five-and-a-half month extension was filed.

October 16

  • File a 2016 income tax return (Form 1040, Form 1040A or Form 1040EZ) and pay any tax, interest and penalties due, if an automatic six-month extension was filed (or if an automatic four-month extension was filed by a taxpayer living outside the United States).
  • Make contributions for 2016 to certain retirement plans or establish a SEP for 2016, if an automatic six-month extension was filed.
  • File a 2016 gift tax return (Form 709) and pay any tax, interest and penalties due, if an automatic six-month extension was filed.

December 31

  • Make 2017 contributions to certain employer-sponsored retirement plans.
  • Make 2017 annual exclusion gifts (up to $14,000 per recipient).
  • Incur various expenses that potentially can be claimed as itemized deductions on your 2017 tax return. Examples include charitable donations, medical expenses, property tax payments and expenses eligible for the miscellaneous itemized deduction.

Article Dean Dorton

Previously, the IRS announced that it extended relief to taxpayers in several Kentucky counties which were affected by severe weather earlier this spring.  Now, the Kentucky Department of Revenue has announced that it will also allow for the automatic extension of tax returns of those impacted by the severe weather.

As with the Federal declaration, residents or businesses whose principal place of business is located within the Kentucky counties of Bath, Bourbon, Carter, Elliott, Franklin, Jefferson, Lawrence, Madison, Rowan and Scott are eligible for the Kentucky relief provisions.

Eligible taxpayers who had an original or extended filing or payment deadline occurring between April 2, 2015 and July 31, 2015 now have until July 31, 2015 to timely file or make a tax payment; this includes individual, corporate, trust, estate, gift, partnership, S-corporation and non-profit annual income tax returns and estimated tax filings, including the April 15 individual tax deadline.  The Kentucky Department of Revenue has also announced it will waive the penalties for employment tax deposits due on or after April 2, and on or before April 17, as long as the deposits were made by April 17, 2015.

For more information, read the original IRS publication.  Additionally, if you have any questions concerning the filing of a return or tax payments, contact the Kentucky Department of Revenue’s Office of Income Tax at 502-564-4581.

For further assistance, please contact your Dean Dorton representative or Justin Shelman at jshelman@deandorton.com or Mike Harbold at mharbold@deandorton.com.