Federal 'death tax' real, but only affects wealthy


POSTED: Friday, June 26, 2009

Question: Someone told me there is such a thing as a “;death tax.”; After you die, whatever you have left, the government taxes it. Is that true?

Answer: The so-called “;death tax”; is actually the federal estate tax, described by the Internal Revenue Service as “;a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death.”;

However, most Americans don't have to worry about paying that tax.

According to the IRS, the estate tax only affects the wealthiest 2 percent of all Americans.

In fact, the IRS says “;most relatively simple estates,”; involving cash, publicly traded securities, small amounts of other assets and no special deductions or elections, or jointly held property, don't require filing an estate tax return.

A filing is required for estates with combined gross assets and prior taxable gifts exceeding $2 million in 2006-2008 and $3.5 million effective this year, for those who died on or after Jan. 1.

Meanwhile, many states also impose an estate tax, with the state version called an estate tax or an inheritance tax.

However, Hawaii doesn't have either tax, and its Estate and Transfer Tax is not in effect for people dying after Dec. 31, 2004, through Dec. 31, 2010.

As explained by the state Department of Taxation, Hawaii's Estate and Transfer Tax is based on the federal state death tax credit.

The Economic Growth and Tax Relief Reconciliation Act of 2001 phased out that tax credit from 2002 to 2004. From Jan. 1, 2005, through Dec. 31, 2010, the credit was repealed and replaced with a deduction for state death taxes.

What happens after 2010?

If the federal government reinstates the state death tax credit, Hawaii's Estate and Transfer Tax would again become effective, according to state tax officials. If it decides to extend the deduction, Hawaii would remain without an estate and transfer tax.

You can read about the Estate and Transfer Tax at www6.hawaii.gov/tax/announce/ann05-20.pdf.

Question: As a high school student I follow all the articles about the Board of Education and Department of Education actions closely. Many times articles mention that a teacher or community member or parent testified at a BOE public hearing or meeting, but very rarely do I hear of students testifying. Are students allowed to testify, and if yes, where can I get more information?

Answer: Students are most welcome to testify and regularly do, said Alex Da Silva, public information officer for the Board of Education.

There's even a student representative on the board.

You can either submit written testimony or testify in person. Board meetings are held in the Queen Liliuokalani Building, 1390 Miller St., Room 404.

Testifiers are asked to sign in before the meeting starts, but if you arrive late, you generally should be able to testify as well, Da Silva said. Testimony is limited to three minutes.

You can submit testimony online or find out when meetings will be held and what their agendas are by going to the school board's Web site, www.boe.k12.hi.us, or by calling Da Silva's office at 586-3536.

Meeting notices and agendas are posted seven days in advance.

Write to “;Kokua Line”; at Honolulu Star-Bulletin, 7 Waterfront Plaza, Suite 210, 500 Ala Moana, Honolulu 96813; call 529-4773; fax 529-4750; or e-mail .(JavaScript must be enabled to view this email address).