{"id":3460,"date":"2019-01-16T19:53:29","date_gmt":"2019-01-16T19:53:29","guid":{"rendered":"https:\/\/www.ua-cpas.com\/blog\/?p=3460"},"modified":"2019-02-12T05:43:26","modified_gmt":"2019-02-12T05:43:26","slug":"save-on-2018-estate-and-trust-income-taxes","status":"publish","type":"post","link":"https:\/\/www.ua-cpas.com\/blog\/index.php\/2019\/01\/16\/save-on-2018-estate-and-trust-income-taxes\/","title":{"rendered":"Still Time to Save on 2018 Estate and Trust Income Taxes"},"content":{"rendered":"<p><span style=\"color: #800080;\"><strong>\u00a0 Distribute by March 6, 2019 to Reduce High Estate &amp; Trust Income Taxes\u00a0<\/strong><\/span><\/p>\n<figure id=\"attachment_3542\" aria-describedby=\"caption-attachment-3542\" style=\"width: 224px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-3542\" src=\"https:\/\/www.ua-cpas.com\/blog\/wp-content\/uploads\/2019\/01\/savings-coins2.jpg\" alt=\"\" width=\"224\" height=\"224\" srcset=\"https:\/\/www.ua-cpas.com\/blog\/wp-content\/uploads\/2019\/01\/savings-coins2.jpg 224w, https:\/\/www.ua-cpas.com\/blog\/wp-content\/uploads\/2019\/01\/savings-coins2-150x150.jpg 150w\" sizes=\"auto, (max-width: 224px) 100vw, 224px\" \/><figcaption id=\"caption-attachment-3542\" class=\"wp-caption-text\">Tax Savings for Estates and Trusts<\/figcaption><\/figure>\n<p>If you are the executor of an estate or the trustee of a trust, you should know that egregiously high income tax rates apply to estates and trusts at very low levels of income.\u00a0 Despite the new tax act, in 2018, for estates and trusts, a 37% income tax rate as well as the 3.8% Net Investment Income (NII) tax kicks in at $12,500 of income. That\u2019s not very high. \u00a0\u00a0For example, let\u2019s say an estate has income of $212,500. The tax on the $200,000 (income in excess of the $12,500 threshold), at 40% equals a tax of $80,000. Ouch!<strong>\u00a0<\/strong><\/p>\n<p><strong><span style=\"color: #800080;\">Help! Is there any hope?<\/span><\/strong><\/p>\n<p>Yes, the estate and trust only pays tax on what\u2019s not distributed. Distributions lower the income tax for the trust and at the same time increase the recipient\u2019s personal income tax. However, individuals do not pay the highest rates unless they are wealthy. In our example, if there are four beneficiaries and each receives $50,000 (one-fourth of the $200,000) many individuals will only pay 10% &#8211; 24% on that $50,000 instead of 40%.\u00a0 Potential tax saving could range from $32,000 to $60,000 depending on the individual tax bracket of each beneficiary.<\/p>\n<p><span style=\"color: #800080;\"><strong>Is there anything I can do?<\/strong><\/span><\/p>\n<p>It\u2019s not too late. There\u2019s a rule allowing distributions made in the first 65 days of the next year to be treated as if made in the preceding year. A special election must be made on the Fiduciary Income Tax Return. \u00a0This year\u2019s deadline is \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<span style=\"color: #800080;\"><strong>March 6, 2019<\/strong><\/span>. Executors and trustees should act soon to take advantage of this opportunity for substantial tax savings.<\/p>\n<p>Please contact us for assistance with making distributions or any other tax related questions about managing a trust or estate.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0 Distribute by March 6, 2019 to Reduce High Estate &amp; Trust Income Taxes\u00a0 If you are the executor of an estate or the trustee of a trust, you should know that egregiously high income tax rates apply to estates and trusts at very low levels of income.\u00a0 Despite the new tax act, in 2018, [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,11,22],"tags":[82],"class_list":{"0":"post-3460","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-estate-trusts-guardianships","7":"category-income-taxes","8":"category-tax-tips-for-individuals","9":"tag-estate-taxes","10":"entry"},"_links":{"self":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3460","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=3460"}],"version-history":[{"count":4,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3460\/revisions"}],"predecessor-version":[{"id":3544,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3460\/revisions\/3544"}],"wp:attachment":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=3460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=3460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=3460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}