unified credit

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Unified Credit

In the United States, a tax credit on estates and large gifts. The unified credit is exceptionally large so that most people will not need to pay federal taxes on their estates and large gifts. For example, the unified credit on an estate is usually around $1 million, meaning that the estate has to be worth more than that in order to be subject to the estate tax.

unified credit

A credit used against federal taxes due on estates and large gifts. Under current law, the unified credit is sufficient to offset taxes on values of approximately $1 million in estates and large gifts. Thus, the combination of estate value and large gifts must exceed $1 million during a person's lifetime before any taxes must be paid to the federal government.
References in periodicals archive ?
Therefore, the distinction is that the subtraction at item 2 for gift tax is a "tentative tax" (before any offset for unified credit), whereas item 2 of estate tax is the actual amount payable (after all unified credits have been used).
They may have an estate well above the unified credits allowed by the IRS.
While naming a trust as beneficiary provides for efficient use of a couple's unified credits, it generally results in three income tax disadvantages.
The above charts demonstrate that either Jim's 401(k) or Sally's 403(b) must be used to shelter both unified credits.
The marital and prorated unified credits discussed above may also be used to minimize or eliminate the U.
The above charts demonstrate that either Jim's 401k or Sally's 403b must be used to shelter both unified credits.
The taxpayers also tendered as evidence a fax informing their accountant that they had funded SFLP II and requesting advice as to the percentage of partnership interests they should transfer to the children to maximize use of the gift tax annual exclusion and applicable unified credits.
21] Third, the premiums would exhaust their unused unified credits and result in high taxable gifts in later years, thereby further increasing their out-of-pocket costs in the future.
17) The donees must reflect the deemed gift of the lapsed withdrawal right on a gift tax return, reducing their unified credits.
Taxpayers often sought to capitalize on their use of unified credits, through varied means.
Today, in assisting these same clients with estate planning, practitioners are confronted with some rather intriguing dilemmas when trying to achieve various tax objectives: [] Fully utilizing unified credits.
The fact that qualified disclaimers are now possible for joint tenancies with right of survivorship and some tenancies by the entirety is good news for clients who may otherwise find themselves taking unused unified credits to their graves.

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