What Are Excise and Local Income Taxes for Estates and Trusts?
5 of 7 in Series: The Essentials of Taxes for Estates and Trusts
If the estate or trust that you are administering owns vehicles of transportation, such as planes, boats, and automobiles, you may have to pay a yearly excise tax on those objects. Some cities, towns, and counties impose an income tax on estates and trusts in addition to the state income tax. Check the tax laws in the decedent’s domicile to determine whether the estate or trust is subject o local income taxes.
Planes, boats, automobiles, and any other objects that move are often assessed an annual excise tax. If the trust or estate you’re administering owns property subject to excise taxes, you need to be certain they’re paid. Unpaid excise tax bills may lead to tickets and, in extreme cases, seizure by the taxing authority. You don’t want to leave your office for lunch and find a boot nailed to the axel of the estate’s car!
Excise taxes, although owed to the state, are usually paid to the city or town where the property is garaged.
Local income taxes
In the grand scheme of things, few cities, towns, or counties impose an income tax, but enough do so as to affect lots of people. If your estate or trust is resident in one of these locales, you must calculate not only the state income tax but also the local one.
Fortunately, these local calculations are usually done right on the state income tax return, and they piggyback right onto the state calculation. Consequently, figuring out how much you owe isn’t tough, provided you’ve already successfully tackled the state income tax calculation.