Estate
Minnesota taxes all the assets of a decedent before the assets are distributed to the decedent's beneficiaries. This tax is called an estate tax. An estate tax differs from an inheritance tax, which is a tax on the beneficiaries once they receive the assets. Minnesota does not have an inheritance tax unless a Minnesota taxpayer inherits an individual retirement account (IRA). In that case, the taxpayer may have to pay for the decedent's pre-tax contributions.
Filing
The estate must file Form M706 if the decedent resided in Minnesota at the time of her death. In general, estates valued over $1 million are required to file for the Minnesota estate tax.
Deadline
The due date for filing Form M706 and paying the estate tax is nine months after the estate owner's death. For decedents who died after December 31, 2008, an automatic six-month extension is granted, which extends the deadline to 15 months.
Payment
Payment can be made electronically or mailed with a check payable to Minnesota Revenue. The estate can make payments in installments if the Internal Revenue Service has granted an extension to pay the federal estate tax, if the Minnesota estate tax is more than $5,000, if the executor sends a letter within nine months of the estate holder's death and if the installments are in equal amounts. Interest applies to the amount due when payments are made in installments.
Penalties
Penalties will apply to the estate for late payment, late filing, failure to file or filing a fraudulent return. For late payments, a 6 percent penalty will accrue on the unpaid tax. If you file Form M706 late, a 5 percent late fee will apply to the unpaid tax. If you fail to file or file a fraudulent return, you can be held criminally liable.
Disclaimer
This article is for educational purposes only, to give a basic overview of the Minnesota estate tax laws, which are subject to change. It is not intended to give legal advice. To determine how the facts of your situation apply to Minnesota law, consult a qualified attorney licensed to practice law in Minnesota.
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