This NebFact will help clear up the confusion by explaining the key terms used when determining estate and gift taxes. However, the beneficiaries of the estate may have to pay the tax if the estate does not pay it when it is due. This can occur when part of the estate's assets need to be sold in order to pay the tax, and the beneficiaries choose to pay the tax themselves, rather that have the estate sell any assets. While Federal Estate Taxes and Gift Taxes are different, the Unified Rate Schedule combines the taxation of estates with the taxation of gifts. Any gift credit used reduces the amount of the unified credit available later for offsetting estate taxes.
Tax law defines the gross estate and the taxable estate of the decedent.
The tentative estate tax due is figured from the taxable estate. Various credits are applied to the tentative estate tax to determine the actual estate tax due. The terms, gross estate, taxable estate and the various credits allowed to estates when computing the federal estate tax due, are explained in this NebFact. Also included is information on filing the tax form, paying the tax and some planning considerations. Before tax can be assessed, the value of the estate must be computed.