Less Estate Tax Returns Filed

10/19/2010

Recently, the IRS announced that less than 15,000 estates owed federal estate tax for the 2009 tax year, down from 17,000 in 2008. In 2001, the number was 52,000.

Why the drop?  The amount an estate can be worth without having to pay an estate tax has gradually increased from $675,000 to $3.5 million. In fact, the federal estate tax exemption increased from $2 million to $3.5 million between 2008 and 2009 alone - a $1.5 million jump - which explains why over 2,000 less estates owed estate taxes in 2008 versus 2009.

With the federal estate tax repealed for 2010, no estates will owe federal estate tax this year so the number of filed returns should drop to zero.  However, the estate tax is scheduled to come back on January 1, 2011 with only a $1 million exemption. This means the number of estates that owe estate tax will increase significantly for the 2011 tax year when compared with the 2009 tax year - at least 52,000 as mentioned above if 2001, a year when the estate tax exemption was $1,000,000, can be used as an indicator.