MA and Federal Estate Taxes

In addition to income taxes, another type of taxes has existed in the U.S. since about 1920. It's a tax on the total amount of property we own on our death.

Like the income tax, only some people face actually paying this post death tax. It's called the 'estate tax', but some people call it the death tax.   

Total 'Estate' value determines if tax is paid

Both MA and the Federal tax law gives you an exemption from this tax, and the exemption amount differ for both.

• Massachusetts gives you a credit against any estate tax up to $1 million of assets. So, if you have less than that amount, no estate tax is due and typically no MA estate tax return needs to be filed with the MA Department of Revenue. 
• The Federal exemption is $11.58 million dollars.

Deductions from the Gross Estate are important

Apart from these exemptions, there are two major deductions that come into play. These are the:

• Marital Deduction
• Charitable Deduction

Here is an overly simplified calculation:

Gross Estate (everything you own on death)
less Deductions (Marital or Charitable)
= Taxable Estate
less Exemption ($1 million MA, $11.58 Federal)
= Actual estate tax, paid to govt. by 9 months after death

Marital deduction: Your estate can deduct from the Gross Estate any amount you leave to a spouse. For married persons, this deduction almost always leads to a zero tax on the death of the first spouse. 

Charitable deduction:  Another way to pay less estate tax is to leave money to a charity. After your death, this amount is subtracted from your gross estate to determine your Taxable Estate. If the Taxable Estate is under the exemption ($1 million MA, $11.58 million Federal) then your estate will pay no estate tax. 

Green Card Holders (non US citizens)

There is a special issue involved if a surviving spouse is not a US Citizen.​