Unified Estate Tax Credit
Is it your first time to hear this topic, Unified Estate Tax Credit? Well, let your mind wander, while feeding the same with information as you go with the readings in the succeeding pages. It is true that the Tax Credit grant is somewhat implemented already, however the manner of computing your tax depends on what we call, Unified Estate Tax Credit. How is this done? When you are going to compute for said tax, there are three (3) things that you must consider, to wit:
The Estate Tax
This kind of tax refers to the imposition of a fixed amount of percentage upon the privilege of transferring real property from the decedent to his or her heirs. In this kind of tax, the same is very much related with the imposition of Unified Estate Tax Credit insofar as both of them deal with real property or the real estate, whichever is preferable.
The Gift Tax
In this type of related taxes imposable upon the taxpayer, this kind of tax is especially made on gifts or bequeaths given by one to another. What do gifts include? Well, these include personal property or those considered to be movable, as what is defined by the words of the law. This is closely related to the present Tax Credit for the reason that both of them deal with a grant, a benefit, a transfer of privilege from person to person.
The Generation Skipping Transfer (GST) Tax
The last one is known as the mediator or the equilibrium between the two (2) aforementioned types of tax. The next paragraph will probably clear your minds should there be clouds or anything.
Why is it considered as a mediator?
The main reason why this kind of tax is considered to be a mediator or the balancing factor between the federal estate tax and the gift tax, is the fact that in these both taxes, when one transfers or bequests something or a property for that matter, to another, and the latter transfers it once again to a third person, taxes imposable are to be computed starting from the first transfer, then followed by another transfer. In this type of tax, the tax is imposed only once, without a need of counting the generations. What is imposed here is only the amount existing between the generations, but only to those which are considered to be substantial taxes.
Finally, this Unified Estate Tax Credit is aimed at preventing tax avoidance. Primarily, it is created in order to serve as a guard to taxpayers who had made a habit of avoiding or evading the taxes imposable upon them. Although it would seem that Tax Avoidance is not punishable as severely as Tax Evasion, for the reason that the latter is the one held as a criminal liability or an offense punishable by law, still there is a must to prevent the practice of Tax Avoidance.
