Thinking about your death is not an easy thing to do. Add thinking about your loved ones being affected by the tax you owed is painful. These aren’t the types of planning you want to do every day, but a little effort from you at the right time can save your family a great deal of fatigue. You want to leave your family happy and peaceful after you leave this beautiful world.
What Happened To The Tax Debt When Someone Dies in Sioux Falls, SD – Some Things to Consider Carefully
The first thing to remember is that the limit to collect tax debt by the IRS is 10 years. The 10 years may be considered by you a long time before your tax will be forgiven, but the collection efforts made by the IRS during these 10 years will be a tiring procedure, and most taxpayers cannot survive that. The wage garnishment, tax lien, and tax levy are some of the unpleasant tools used by the IRS.
Your tax doesn’t go away with your death, and the IRS will go after your estate before distributing your wealth to your heirs.
After you die, all your assets, financial accounts, and properties become your estate. Tax debt is meant to be fulfilled before any other debt, and so your estate has to pay off your tax debt first.
If you file tax returns with your spouse jointly, then the surviving spouse needs to pay the remaining tax debt. However, if the tax debt is the result of the financial recklessness of your partner, you can request innocent spouse relief. The claiming spouse has to provide some sort of proof about their innocence in this regard.
Your estate is not distributed among the heirs. The estate acts as an independent entity and needs to fulfill most debts, including tax. The estate doesn’t have to file returns if it doesn’t exceed $5 million.
Knowing all about tax debt and “estate” rules can help you plan your estate carefully. First of all, always try to pay taxes on time as early as possible. You won’t like penalties and interest charged on tax that will go on to accumulate as increasing tax debt.
Losing loved ones is painful enough that survivors shouldn’t have to face the tax debt payment as well. There are some ways to protect heirs from debt payment, like putting your assets and properties into a trust.
The other members of the trust, mostly heirs, inherit the shares of the deceased and without having to pay off the debt owed by the deceased. The taxes, however, aren’t protected by these tricks. The taxpayers are aware of their tax debt as they are notified by the IRS to pay taxes.
Tax Debt and Heirs
After your death, your heirs are notified by the IRS about the tax debt. The executor or administrator of the estate responsible for distributing the estate is also notified so that the tax debt is settled before any distribution.
If the executor or heirs don’t cooperate or the amount of tax debt is too big, the IRS attaches an “estate lien” immediately to the property.
To sum this up, we advise you that don’t let tax debt accumulate too big that you can’t handle and keep your family informed about it so that they aren’t surprised to know about it after your unfortunate demise. Consult USA Tax Settlement and get timely professional help.
Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.