Explanation of the Unified Tax Credit

In 2001, the Economic Growth and Tax Relief Reconciliation Act established the unified tax credit. The unified tax credit is utilized in conjunction with estate and gift taxes. The estate and gift tax work to make sure that the majority of an estate is given to Uncle Sam, while the unified tax works to make sure that the majority of an estate is given to the heirs. The tax credit allows a person to gift a certain amount of their assets, without having to pay taxes, such as the gift or estate taxes.

How It Works

For most people, they will not have to worry about the tax. The unified tax credit is only applicable to persons whose estate is assessed to be worth over $2,000,000. If your estate is valued at $2,000,000 or more, the tax gives a credit of $780,800. In 2009, the estate amount increased to $3,000,000, providing a credit of $1,455,800. For married couples, the estate can be over $4,000,000 before the tax liability would take effect. It is important to stay on top of the changing estate laws to be sure that you are not taxed additional monies.

blog comments powered by Disqus