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Is family responsible for deceased IRS debt?

The only person who might be held personally accountable for the tax bill would be the estate's executor, if: The executor distributes assets to heirs and beneficiaries before paying the taxes, The executor pays off other debts of the estate before paying the tax liabilities, or.

kahnlitwin.com - Am I Responsible for a Deceased Loved One's Unpaid Tax Bills?

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*Editor’s Note: This blog has been updated as of February 15, 2021 for accuracy and comprehensiveness. Have you recently experienced the death of a loved one? Wondering how their outstanding tax liabilities will be paid off after you and the estate’s executor have exhausted the decedent’s remaining cash and assets? This is a common situation, and luckily there are a few things you can do to ensure that the process of paying off a loved one’s taxes will be as painless as possible.

How do the debts get paid?

The decedent’s estate’s executor is responsible for negotiating and paying any debts left by an individual, using the decedent’s remaining money and property. If a decedent’s estate is insufficient to pay all debts (referred to as an insolvent estate), federal income and estate income taxes must be paid first.

Do relatives have to settle unpaid taxes with personal funds?

When a decedent’s assets are insufficient to cover his/her federal income and gift tax liabilities, relatives are not responsible for the remaining balances (unless a relative is the estate’s executor). The only person who might be held personally accountable for the tax bill would be the estate’s executor, if:

The executor distributes assets to heirs and beneficiaries before paying the taxes,

The executor pays off other debts of the estate before paying the tax liabilities, or The executor is aware of the insufficient funds and inability to pay the taxes and spends the assets otherwise.

Are there any instances where relatives have to pay?

Besides the exceptions listed above for relatives who double as estate executors, there are payment obligations for the following individuals when tackling a decedent’s debt:

Anyone who co-signed for a loan with the decedent,

Anyone who was a joint account holder with the decedent,

Residents of community property states, like California, where a surviving spouse might be held accountable for debts, Residents of states where law requires a surviving spouse to pay off some of the debts—namely health care expenses, and

Anyone who shares in any debt of the decedent

There is no federal inheritance tax, but some states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania) tax some assets inherited from the estates of deceased persons. If Income in Respect of a Decedent (IRD) assets like IRAs or 401(k)s are owned by the decedent and are distributed to their beneficiaries, this money would be taxable to the beneficiary in the year they receive it. Make sure to check your state’s requirements and review loans or accounts, if any, that you have shared with the decedent.

Questions? Contact any member of our Private Client Services Team.

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Is today a gridlock day in Manhattan?

The 2022 gridlock days are as follows: Wednesday, Novem. Thursday, Novem. Tuesday, Novem.

timeout.com - NYC Gridlock Alert Days 2022: What days to avoid driving in Manhattan

As a clear indication that the holidays are finally upon us, the Metropolitan Transportation Authority (MTA) has just released a list of 14 “gridlock alert days” that run through the end of the year. During the highlighted dates, car traffic is expected to reach an all-time high, making it incredibly difficult to get around in a vehicle.

The 2022 gridlock days are as follows:

Wednesday, November 16, 2022

Thursday, November 17, 2022

Tuesday, November 22, 2022

Wednesday, November 23, 2022

Wednesday, November 30, 2022

Thursday, December 1, 2022

Friday, December 2, 2022

Tuesday, December 6, 2022

Wednesday, December 7, 2022

Thursday, December 8, 2022

Friday, December 9, 2022

Tuesday, December 13, 2022

Wednesday, December 14, 2022

Thursday, December 15, 2022

Now that you've got that list handy, make sure to add it to your calendar and opt for public modes of transportation on those actual days. We even suggest walking or biking over driving your own car or grabbing an Uber or a yellow taxi. While we’re on the subject: did you know that, according to the City of New York, the term “gridlock” actually originated here, in reference to the grid plan that defines Manhattan’s streets? Specifically, the word describes a traffic situation in which intersections are blocked by vehicles, therefore preventing cars from moving in either direction. Yes, a familiar situation indeed.

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