Estate Tax in California
States need to maintain themselves, and part of their revenue sources are collected through taxes to reinvest in various essential sectors, such as education, health, security, and justice. In this post, we explain everything related to the estate tax in California.
What is the Estate Tax?
Taxes are fees that legal and natural individuals pay to the State to finance and support public expenditures. They are amounts of money that we settle to the public administration to contribute to the treasury. In the estate tax case, it’s paid when a natural or legal person dies and leaves assets distributed among heirs. To calculate the tax, an appraiser must first determine the value of all the assets left as an inheritance.
An estate tax is applied to a part of the population that owns the most. Therefore, the tax can’t be applied to all properties, only those reaching the value threshold, which may differ between states within the same country. We shouldn’t confuse inheritance tax and estate tax under any circumstance. The latter is paid by those who inherited money after its distribution.
Is it Necessary to Pay Estate Tax in California?
Although California is one of the 38 states in the United States that does not have an estate tax, it does have other taxes that apply to wealth and property upon death. Financial advisors or certified public accountants are qualified to advise you on your objectives, as situations may arise in which you need guidance.
For example, suppose a relative living in a different state left you money as an inheritance. In that case, it is necessary to review the state’s laws, as you may have to pay an inheritance tax.
California does not pay inheritance or gift taxes either, but the above fact should be viewed with caution. In California, the federal estate tax will be in effect for valuations from $11.7 million in 2021 and up to $12.06 million in 2022.
Some taxes can be portable, and the federal estate tax is one of them, which applies to married couples. If the married couple takes the proper legal measures and planning, they can bypass this tax on an estate that ranges up to $24.06 million after they both perish.
Don’t know how to pay taxes? Paul Anderson will help you. He is a Certified Public Accountant who is here to help you save on taxes. He offers you accounting and tax preparation services in San Diego, California. Plan your loved ones’ finances before they pass away or if they recently have. Check how much you have in retirement accounts or calculate how much you will have when you retire.
Making and updating your estate plan regularly is good advice to follow. That will help you anticipate significant changes, such as your children’s home purchases and considerable income increases in your salary. These aspects could affect what you want your estate to look like. Secure your future by contacting a professional to help you prepare and calculate your taxes today.