Estate Tax FAQ for Small Business Owners & Self-Employed Individuals

Estate Tax FAQ for Small Business Owners & Self-Employed Individuals

If you own a small business, or you are a self-employed individual, your business is among your top priorities in life. Not only is it your main source of income, but it is also a source of pride. That being said, businesses come with a wide array of complex financial implications, including how they may affect your estate taxes. Below, our experienced Maryland estate tax attorney has compiled some of the most frequently asked questions by small business owners and self-employed individuals regarding estate taxes. Here are some of the questions you may have:

Will I have to file an estate tax return if I am a small business owner or a self-employed individual?

When a decedent (someone who passes away) is a United States citizen who passed away in 2016, you will have to file an estate tax return as long as the gross estate of the decedent (as well as the decedent’s adjusted taxable gifts and specific gift tax exemption) is valued at higher than the filing threshold for the year the decedent passed away.

What is the filing threshold for 2021 and years prior?

Each year has a different filing threshold. They are as follows:

  • 2021: $11,700,000
  • 2020: $11,580,000
  • 2019: $11,400,000
  • 2018: $11,180,000
  • 2017: $5,490,000
  • 2016: $5,450,000
  • 2015: $5,430,000
  • 2014: $5,340,000
  • 2013: $5,250,000
  • 2012: $5,120,000
  • 2011: $5,000,000.

What happens if I miss the due date for filing an estate tax return?

If you are the representative of an estate and you missed the deadline for filing your estate tax return (usually within nine months after the date of the decedent’s death), you may request a six-month extension of time for filing the estate tax return. That being said, if you also missed the 15-month deadline, whether you can request another extension depends on whether the decedent’s estate has a filing requirement based on the filing threshold.

What is included in an estate and how do I know an estate’s true worth?

When it comes time to pay an estate tax, you will go by the decedent’s gross estate value, meaning the gross value of all assets and interests the decedent had at the time of his or her passing. Some examples of these assets and interests may include real estate, trusts, cash and securities, insurance, annuities, business interests, and more.

Do I need an attorney?

While you may be able to deal with these matters on your own, you should strongly consider retaining the services of a knowledgeable Maryland estate tax attorney who can assist you, every step of the way. This is especially true if the estate is large, if the decedent has spotty records, if there are multiple beneficiaries, and more.

Contact our experienced Montgomery County, Maryland firm

The attorneys at JD Katz have years of experience compassionately guiding clients in Maryland through the estate planning and administration process. Our firm also has experience with matters of elder law, business law, tax law, and litigation. For a legal team that will put your needs first, contact JD Katz today.

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