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The U.S. is giving up on taxing inheritances – The Death Tax Repeal Act of 2025: What You Need to Know

The Truth News — Thu, 19 Jun 2025 09:02:54 +0000

The U.S. is giving up on taxing inheritances – The Death Tax Repeal Act of 2025: What You Need to Know

Congressional Republicans are proposing to permanently allow wealthy families to pass on more of their assets tax-free, as the federal government all but abandons taxing large inheritances.

Under current law, estates pay tax only on transfers above $13.99 million for single filers and $27.98 million for married couples. Those thresholds, doubled by President Donald Trump’s 2017 tax law, are scheduled to fall by roughly half at the end of 2025. But in the tax bill before Congress, both the House and Senate versions would raise the exemption starting next year to $15 million for individuals and $30 million for couples, then set them to adjust for inflation in the future.

Though they represent a small part of the overall costs of Trump’s tax bill, these changes are set to weaken an estate tax that already affects fewer households than it has in decades. When the federal estate tax was first imposed in 1934, roughly 8,600 deaths resulted in estate tax liability, or 0.9 percent of adult deaths. In 2019, the most recent year for which IRS data is available, only 2,100 deaths resulted in estate tax liability, or 0.08 percent of deaths. The proposed increases are expected to reduce that share even more.

“The estate tax is barely hanging on right now,” said Steve Wamhoff, federal policy director at the left-leaning Institute on Taxation and Economic Policy. “This bill would make sure it almost disappears.”

The estate tax has proved divisive in Washington, as Republicans have for years sought its eradication. When someone dies, their assets become an estate. For 2025, only the portion of an estate above $13.99 million per person — a limit that also absorbs any large gifts made while someone is alive — is subject to the federal estate tax, and only the value over the exemption is taxed, at rates that top out at 40 percent. Twelve states and D.C. impose their own estate or inheritance taxes with lower thresholds and a variety of rates.

While the tax’s defenders say it is necessary to curb dynastic wealth at a time of rising inequality, conservatives have long argued the policy unfairly hits the same taxpayer twice because it taxes assets that were originally accumulated after their owners paid income taxes. Levies on consumption, many economists say, are more effective and efficient ways to make the tax code fairer.

The provision raising the limit is not considered controversial among Republicans and is expected to pass without dissent among the GOP ranks in either the House or Senate. Senate Majority Leader John Thune (R-South Dakota), who has sponsored Senate legislation to outright repeal what Republicans call “the death tax,” has said doing so is necessary to prevent cash-poor firms, including family farms, from selling off equipment or land to pay the tax.

The estate tax changes in the current GOP tax bill will cost the federal government roughly $210 billion over the next 10 years, according to the nonpartisan Joint Committee on Taxation.

“It’s a tax on savings, and there’s a double-taxation issue — you earn the money, you paid taxes, and then the government comes after you again when you die,” said Michael Strain, an economist at the American Enterprise Institute, a center-right think tank. Strain said that the levy “creates weird perversities: Two people who know they’re going to die — one buys cocaine and goes to Vegas and gambles and pays no tax, the other gives money to kids and pays the tax.”

Several decades of GOP influence on federal policymaking have whittled down the estate tax. Before President George W. Bush’s 2001 tax cuts, about 2 percent of estates paid the levy, far more than do now. Even those estates who do owe the tax often reduce or eliminate their liability, said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, through trusts, valuation discounts and life-insurance strategies.

Republicans under Bush sought to eliminate the estate tax, but because of Senate rules settled for merely shrinking it — a strategy the party has replicated under Trump.

“Having an estate tax that affects so few heirs allows this massive intergenerational transfer of wealth that keeps the rich richer and gives them the opportunity to get even richer,” Gleckman said.

The effects of the weaker estate tax on inequality are hard to measure. But federal data suggests that inequality has broadly continued to rise: The average wealth of a family in the top 10 percent soared from roughly $3 million in 1989 to more than $9 million in 2022, according to the latest nonpartisan Congressional Budget Office report. Over the same period of time, those in the bottom 10 percent found their average wealth rising from $27,000 to $74,000, the report found.

“The estate tax is one of the few federal policies that can slow down the growing wealth gap and this enormous growth in inequality,” said Wamhoff, of the Institute on Taxation and Economic Policy. “We’re basically not taxing generational wealth at all right now.” source

The Death Tax Repeal Act of 2025: What You Need to Know

On February 13, 2025, Republican lawmakers in the House of Representatives and the Senate introduced the Death Tax Repeal Act (the “Act”). The Act aims to permanently eliminate the federal estate tax, often referred to as the “death tax,” and would significantly alter the future landscape of estate taxation. Variations of the Act have been introduced in Congress each year since 2015 but have failed to become law each time. However, with each reintroduction, support of such legislation has consistently increased year over year.

Background

The Internal Revenue Code (the ”Code”) currently imposes tax on an individual’s right to transfer property to others, both during life and at death. For transfers of property during life, the federal gift tax is imposed at a rate of 40%. For transfers of property at death, the federal estate tax is also imposed at a rate of 40%. However, the Code provides each individual with what is known as the “unified credit,” allowing each individual to transfer a certain value of assets tax-free during their lifetime or at their death. In 2025, the unified credit is $13,990,000. Any amounts transferred in excess of this $13,990,000 figure, either during life or at death, are subject to the 40% tax.

The Code imposes an additional tax, known as the federal generation-skipping transfer tax (“GST Tax”), on transfers to individuals who are in a generation two or more below the transferor, whether those transfers are made during life or at death. However, the Code also provides each individual with an “exemption,” or tax-free amount, before the 40% GST Tax applies. That exemption is currently equal to the unified credit amount of $13,990,000.

Currently, the unified credit and exemption are at an all-time high. Under the first Trump administration, the unified credit and exemption were doubled as a result of the 2017 Tax Cuts and Jobs Act (the “TCJA”). The TCJA has a sunset date of January 1, 2026. This means if no action is taken to extend the TCJA, the unified credit and exemption will return to their pre-TCJA level on January 1, 2026, effectively cutting the current unified credit and exemption in half. If the TCJA does sunset, the unified credit and exemption available to individuals in 2026 will be approximately $7,000,000.

Key Provisions of the Death Tax Repeal Act

Permanent Repeal of the Estate Tax and GST Tax: The Act would permanently eliminate the federal estate tax and GST Tax, allowing individuals passing away after adoption of the Act to transfer an unlimited amount of property at death free of tax.
Permanent Gift Tax Exemption and Reduced Gift Tax Rate: The Act would impose a permanent lifetime gift tax exemption of $10,000,000, as adjusted for inflation (adjusted to $13,990,000 in 2025). Effectively, the current unified credit for gift tax would become permanent and would only be used for transfers made during life, as transfers at death would be free of tax as outlined above. Transfers made during life in excess of this exemption would be subject to a reduced 35% tax rate.
Retention of the Step-Up in Basis: The Act would maintain the current “basis adjustment” that occurs at death. In other words, if an individual dies owning appreciated assets, those assets would receive a full “step-up” in basis to the date of death fair market value. This would allow beneficiaries to minimize capital gains taxes upon the subsequent sale of any inherited asset.

Passage of the Act could have a significant impact on estate and wealth transfer planning efforts. source

If You Deposit a Lot of Cash, Does Your Bank Report It to the Government?

The Truth News — Sun, 02 Mar 2025 19:33:31 +0000

If You Deposit a Lot of Cash, Does Your Bank Report It to the Government?

Federal law governs how much cash you can deposit before a bank reports it.

The deposit rule does not cover most checks, but does include foreign currency, cashier’s checks and money orders.

Key Takeaways

Banks must report cash deposits of $10,000 or more.
Don’t think that breaking up your money into smaller deposits will allow you to skirt reporting requirements.
Small business owners who often receive payments in cash also have to report cash transactions exceeding $10,000.

Depositing $10,000 or more in cash means your bank or credit union will report it to the federal government. The $10,000 threshold was created as part of the Bank Secrecy Act, passed by Congress in 1970, and adjusted with the Patriot Act in 2002.

The law is an effort to curb money laundering and other illegal activities. The threshold also includes withdrawals of more than $10,000.

When Does a Bank Have to Report Your Deposit?

Banks report individuals who deposit $10,000 or more in cash. The IRS typically shares suspicious deposit or withdrawal activity with local and state authorities, Castaneda says.

The federal law extends to businesses that receive funds to purchase more expensive items, such as cars, homes or other big amenities. These companies are also required to report deposits.

If you want to avoid having your big cash deposit reported to the government, don’t think that you can get around the requirement by breaking up your money into smaller deposits. This is known as structuring, and the government is on the lookout for it, too.

If an individual makes cash deposits over several days that are less than but still add up to at least $10,000, that person will be reported, Castaneda says. This applies even if you spread your deposits across more than one bank.

“Suspicious activity in excess of $5,000 detected by the bank or an institution is also required to be reported,” Castaneda says.

The IRS regulation, in part, reads this way: “Structuring is illegal regardless of whether the funds are derived from legal or illegal activity. The law specifically prohibits conducting a currency transaction with a financial institution in a way to circumvent the currency transaction reporting requirements.”

“Structuring will get you in hotter water than depositing $30,000,” says Morris Armstrong, a Cheshire, Connecticut-based enrolled agent for representing taxpayers before the IRS.

Does This Rule Cover Only Cash?

While the deposit rule does not cover most checks, it does include reporting other forms of money, such as foreign currency, cashier’s checks or money orders. The law also includes investment securities, Castaneda says.

For individual cashier’s checks, money orders or traveler’s checks that exceed $10,000, the institution that issues the check is required to report the transaction to the government. The bank where an individual deposits the check doesn’t need to.

For example, if you’re depositing an $11,000 cashier’s check, your bank won’t be reporting your deposit. The bank that issued the $11,000 cashier’s check already has reported it to the government.

What if You Run a Small Business That Deals in Cash?

Small business owners who frequently receive payment for products or services in cash, such as food trucks, hair stylists and restaurants, must also report any cash transactions exceeding $10,000.

The law applies to all businesses and must be reported on IRS Form 8300. The identity of both parties and the nature of the transaction must be disclosed. Individuals who fail to file can be prosecuted.

If a client pays $1,000 each month in cash, the business owner will likely file a Form 8300 in November, after the amount has reached the $10,000 cash threshold, Armstrong says.

“If a person dropped off $10,000 as a retainer for me to handle a tax issue, I would file a Form 8300 within 15 days,” he says.

Should You Worry About Your Deposits Being Reported to the IRS?

The fact that your bank will report any cash deposits or withdrawals in excess of $10,000 isn’t necessarily cause for alarm.

The intent is to identify and monitor where the money ends up, Castaneda says.

“It should not be construed as illegal activity,” he says. “It also helps authorities to determine if one’s account has been compromised and if a series of transactions are unusual or fraudulent.”

And though the bank may report the deposit of cash you received for, say, selling your car, you don’t need to fill out a Form 8300 to record that sale because you aren’t in the car sales business. source

Yes, banks are required to report cash deposits of more than $10,000 to the federal government. This is to help the government monitor for potential financial crime.

Why does this happen?

The Bank Secrecy Act of 1970 requires this reporting.
The Patriot Act of 2002 adjusted the $10,000 threshold.
The reporting is intended to alert the government to potential crime and fraud, including money laundering.

What happens with the reported information?

Banks file a Currency Transaction Report (CTR) to report the deposit.
The government uses the reported information to monitor for potential financial crime.

Who else needs to report cash transactions?

Businesses that receive cash payments of more than $10,000 must also report the transaction to the government.
The business must complete and submit IRS Form 8300.

Penalties for non-compliance

Individuals and businesses can face fines, prison sentences, or both for not filing Form 8300.

Although many cash transactions are legitimate, the government can often trace illegal activities through payments reported on complete, accurate Forms 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business PDF. Here are facts on who must file the form, what they must report and how to report it.

Who must file

Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file a Form 8300. By law, a “person” is an individual, company, corporation, partnership, association, trust or estate. For example, dealers in jewelry, furniture, boats, aircraft or automobiles; pawnbrokers; attorneys; real estate brokers; insurance companies and travel agencies are among those who typically need to file Form 8300.

Tax-exempt organizations are also “persons” and may need to report certain transactions. A tax-exempt organization doesn’t have to file Form 8300 for a charitable cash contribution. However, under a separate requirement, a donor often must obtain a written acknowledgement of the contribution from the organization. The organization must report noncharitable cash payments on Form 8300. For example, an exempt organization that receives more than $10,000 in cash for renting part of its building must report the transaction. See Publication 526, Charitable Contributions, for details

What’s cash

For Form 8300 reporting, cash includes coins and currency of the United States or any foreign country. It’s also cash equivalents that include cashier’s checks (sometimes called a treasurer’s check or bank check), bank drafts, traveler’s checks or money orders with a face amount of $10,000 or less that a person receives for:

A designated reporting transaction or
Any transaction in which the person knows the payer is trying to avoid the reporting requirement.

Note that money orders and cashiers checks under $10,000, when used in combination with other forms of cash for a single transaction that exceeds $10,000, is defined as cash for Form 8300 reporting purposes.

A designated reporting transaction is the retail sale of tangible personal property that’s generally suited for personal use, expected to last at least one year and has a sales price of more than $10,000. Examples are sales of automobiles, jewelry, mobile homes and furniture.

A designated reporting transaction is also the sale of a collectible, such as a work of art, rug, antique, metal, stamp or coin. It’s also the sale of travel and entertainment, if the total price of all items for the same trip or entertainment event is more than $10,000.

Note that under a separate reporting requirement, banks and other financial institutions report cash purchases of cashier’s checks, treasurer’s checks and/or bank checks, bank drafts, traveler’s checks and money orders with a face value of more than $10,000 by filing currency transaction reports.

Reporting cash payments

A person must file Form 8300 if they receive cash of more than $10,000 from the same payer or agent:

In one lump sum.
In two or more related payments within 24 hours. For example, a 24-hour period is 11 a.m. Tuesday to 11 a.m. Wednesday.
As part of a single transaction or two or more related transactions within a 12 month period

Examples of reporting situations:

Marijuana-related businesses

These businesses must report cash receipts greater than $10,000, in a single transaction and/or related transactions. See the Frequently Asked Questions for more information about the Marijuana Industry.

New or used automobile dealers

If a husband and wife purchased two vehicles at one time from the same dealer, and the dealer received a total of $10,200 in cash, the dealer can view the transaction as a single transaction or two related transactions. Either way, the dealer needs to file only one Form 8300.

A dealership doesn’t file Form 8300 if a customer pays with a $7,000 wire transfer and a $4,000 cashier check. A wire transfer isn’t cash.

A customer purchases a vehicle for $9,000 cash. Within 12 months, the customer pays the dealership cash of $1,500 for accessories for that vehicle. The dealer doesn’t need to file Form 8300 unless the accessories purchase was related to the original vehicle purchase.

Taxi company

When lease payments made in cash by a taxi driver to a taxi company within a 12-month period exceed $10,000 in total, the taxi company needs to file Form 8300. Then, if the company receives more than $10,000 cash in additional payments from the driver, the company must file another Form 8300.

Landlords

This 12-month period also applies to landlords who need to file Form 8300 once they’ve received more than $10,000 in cash for a lease during the year. If a person uses a dwelling unit as a home and rents it less than 15 days during the year, its primary function isn’t considered rental in a trade or business, so they don’t need to report a cash receipt of more than $10,000.

Bail-bonding agent

A bail-bonding agent must file Form 8300 when they receive more than $10,000 in cash from a person. This applies to payments from persons who have been arrested or anticipate arrest. The agent needs to file the form even though they haven’t provided a service when they received the cash.

Colleges and universities

Colleges and universities must file Form 8300 if they receive more than $10,000 in cash in one or more transactions within 12 months. A Form 8300 exception applies for government entities but not for educational entities.

Contractors

Contractors must file Form 8300 if they receive cash of more than $10,000 for building, renovating, remodeling, landscaping and painting.

When to file Form 8300

A person must file Form 8300 within 15 days after the date the person received the cash. If a person receives multiple payments toward a single transaction or two or more related transactions, the person should file Form 8300 when the total amount paid exceeds $10,000. Each time payments aggregate more than $10,000, the person must file another Form 8300.

How to file

A person can file Form 8300 electronically using the Financial Crimes Enforcement Network’s BSA E-Filing System. Those who file many forms may find the batch e-filing option helpful. E-filing is free, quick and secure. Filers will receive an electronic acknowledgement of each submission.

Those who prefer to mail Form 8300 can send it to:

Internal Revenue Service
Detroit Federal Building
P.O. Box 32621
Detroit, MI 48232.

Filers can confirm the IRS received the form by sending it via certified mail with return receipt requested or by calling the IRS Bank Secrecy Act Helpline in Detroit at 866-270-0733.

Taxpayer identification number

Form 8300 requires the taxpayer identification number (TIN) of the payer using cash. If they refuse to provide it, the person should inform the payer that the IRS may assess a penalty.

If the person is unable to obtain the payer’s TIN, the they should file Form 8300 anyway and include an explanation why the form doesn’t have the TIN. The person should keep records showing they requested the payer’s TIN and provide the records to the IRS upon request.

Informing customers about Form 8300 filing

A Form 8300 filer must give each party named on the form written notice by January 31 of the year following the transaction that they filed Form 8300 to report the payer’s cash transaction. The government doesn’t offer a specific format for the payer’s statement, but it must:

Be a single statement aggregating the value of the prior year’s total reportable transactions.
Include the name, address and phone number of the person filing the Form 8300.
Inform the payer that the person is reporting the payments to the IRS.

A person can give a payer who only had one transaction during the year a copy of the invoice or Form 8300 as notification if it has the required information. The government doesn’t recommend using a copy of Form 8300 because of sensitive information on the form, such as the TIN of the person filing the Form 8300.

A person may voluntarily file Form 8300 to report a suspicious transaction below $10,000. In this situation, the person doesn’t let the customer know about the report. The law prohibits a person from informing a payer that it marked the suspicious transaction box on the Form 8300. source

Are Property Taxes Deductible from Federal Income Tax in California

The Truth News — Thu, 27 Feb 2025 08:35:53 +0000

Are Property Taxes Deductible from Federal Income Tax in California?

Taxes are rarely simple. Many taxpayers turn to tax attorneys and other experts to help them get it right when filing their taxes. Nobody wants to file inaccurate taxes and possibly be hit with penalties. However, everybody wants to maximize their deductions to minimize the amount of money they owe to the government. Property taxes in California and many other states can be deducted from your overall taxable income. However, depending on your tax situation, this may or may not be the best idea.

Generally, California taxpayers may deduct the amount of money they have paid towards their property taxes from their taxable income. This effectively reduces the amount of income the federal government can tax and reduces the amount of tax they must pay. As of 2024, the maximum amount of property taxes you may deduct is capped at $10,000. However, you may only claim this deduction if you take the itemized deductions instead of the standard deduction. In some cases, the standard deduction may be more beneficial.

Every year California citizens are required to pay their taxes. For many taxpayers, especially those with multiple streams of income or otherwise complicated financial assets, it can be a major pain. Avoid the headache of doing your taxes by calling our

educting California Property Taxes from Federal Income Tax

As of 2021, California property owners may deduct up to $10,000 of their property taxes from their federal income tax if they are filing as single or married filing jointly. Unfortunately, any property taxes you have paid in excess of $10,000 cannot be counted toward your deduction. The cap is only $5,000 if you are married filing separately, but each spouse may claim $5,000 for a total of $10,000.

Deductions are important because they can lower your overall taxable income. For example, a person who earned a total taxable income of $100,000 and applied the property tax deduction of $10,000 would only have to pay taxes on $90,000 of income.

There are many different kinds of deductions that may be available to you. The more you can deduct from your taxable income, the less money you may owe the government. This is why it is crucial to speak with a legal tax expert, so you do not miss any deductions you are eligible to take advantage of. It is also important because you do not want to mistakenly apply a deduction you are ineligible for and face penalties. Our Sacramento tax lawyers can help guide you through this complicated process.

Limits on Deducting California Property Taxes from Federal Income Tax

As stated above, a single person or a married couple filing jointly may only claim a total of $10,000 as a deduction for property taxes. The limit drops to only $5,000 for married taxpayers filing separately. However, each spouse may claim that $5,000 for a total of $10,000 for the household. Any property taxes you pay exceeding this limit cannot be counted toward your deduction.

If you have been paying property taxes and applying the deduction for the past few years, you should know that this $10,000 cap on property tax deductions is relatively new. In years past, there was no limit and all property taxes paid could be applied to your deduction. For people who paid hefty property taxes, this was a significant deduction on their taxes.

However, in 2017, former President Donald Trump signed the Tax Cuts and Jobs Act and imposed new limitations. As it stands today, taxpayers must abide by the $10,000 cap. If you previously claimed the unlimited deduction, your taxes might look very different from now on, so it is crucial to discuss them with our California tax attorneys.

You must claim the itemized deductions when filing federal income taxes to claim the property tax deductions. Generally, taxpayers may choose either the standard deduction or the itemized deduction. Most taxpayers choose whichever gets them a greater deduction. The standard deduction is available to all taxpayers no matter what kinds of deductions they may be eligible for. Itemized deductions are unique to each taxpayer and will look different depending on what kind of deductions they can claim. Speak with our Vacaville tax lawyers about applying deductions to your taxes.

Deciding Between the Standard or Itemized Deductions When Filing Taxes in California

When filing your federal income taxes, you may take the standard deduction available to everyone or an itemized deduction more tailored to your individual tax situation. A person may include many different types of deductions if they take the itemized deduction. People who choose the itemized deduction over the standard deduction are often business owners who deduct certain operating costs from their taxes. Speak to our California tax attorneys to determine if the itemized deduction is right for you.

As of 2025, the standard deduction is $15,000. This means $15,000 will be deducted from your taxable income no matter what kind of deductible expenses you may or may not have incurred. People with nine-to-five jobs and less complicated finances usually take the standard deduction. To make your property tax deductions worth your while, you will need another deduction of at least $4,600. If your itemized deductions do not amount to at least the standard deduction, it may not be worth claiming.

Essentially, deducting property taxes is only worth your time if your total itemized deductions exceed the standard deduction. Our Stockton tax attorneys can help you comb through your financial records and find any potential tax deductions you may be eligible for. source