We have all heard of it, but most don’t understand it. The Estate Tax, better known as the “Death Tax”, was passed into law in 1916. Over the years the rate has moved up and down dramatically, but those impacted has always been a rather small group of people. According to an article written by the New York Times, approximately 5,500 families pay the tax each year.

As of right now, however, the estate tax has been allowed to lapse. Don’t worry, the government will fix that soon enough. According to the article “until Jan. 1 of this year, it applied to any estate valued at more than $3.5 million, taxing only the money exceeding that threshold, or $7 million for a couple’s estate”. The amount of money the government generates due to the estate tax is considerable. In 2008, the government collected over $28 billion from the death tax. Not quite enough to start another stimulus package, but still more than simply pocket change.

The biggest argument against the estate tax is the double taxation that occurs. The money is taxed as income or capital gains when it is acquired and then taxed again as an estate tax when it is passed on to family members and/or friends. Because of the huge impact on these estates, many estate planners develop very elaborate plans to try and minimize the amount of estate taxes paid.

Through first-hand knowledge I can tell you that any amount of taxes paid on an estate is hard to deal with. If you are expecting to deal with the finalizing of an estate of a loved one, my advice is make sure you understand the laws of your locality and state. Most importantly make sure you have a will and if you are dealing with aging parents, please make sure they have a will also. Having a complete understanding of their wishes will make things go much smoother and will likely remove the stress of “who gets what”.

Arthur over at FinancialBondage.org has a very valid point. When you get your “tax refund” in reality, the government is simply returning to you the amount you overpaid throughout the year. It isn’t a refund or a gift. The government has been using your money as an interest free loan, and they are now returning your money to you with not as much as a thank you.

Take control of your money and start bringing it home. Change your W-4 NOW!

The following quotes are very timely and if you haven’t done your taxes yet, might just lighten up the mood enough for you to jump in there and “git’er done”.

[The Internal Revenue Code is] about 10 times the size of the Bible and, unlike the Bible, contains no good news. — Don Nickles

The income tax has made more liars out of the American people than golf has. — Will Rogers

Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. — Ronald Reagan

Worried about an IRS audit? Avoid what’s called a red flag. That’s something the IRS always looks for. For example, say you have some money left in your bank account after paying taxes. That’s a red flag. — Jay Leno

Remember if you usually get a large return, that means you have given the government an interest free loan of your money. You could have been bringing more home each month instead of letting the government use it. If you would like to decrease the amount you overpay and bring more of your own money home each month look into adjusting your tax withholding by filling out a new W-4. Look here for more information on how to make the adjustment.

Living near Northern Virginia, Maryland is just stones throw away from our front step. The Wall Street Journal has an interesting article detailing some of the economic woes our neighbor to the North is dealing with. Primarily, they have lost about 1000 millionaires and the tax revenue those families used to provide. You will probably never guess why.

Apparently, the wise leadership in Maryland decided the best way to help close last year’s budget shortfall was to increase taxes on some of the wealthiest people in the state. Specifically, they created a new tax bracket for those earning more than a million dollars a year. This great idea raised the top marginal income-tax rate to 6.25%. So in addition to the Federal tax these families have to pay, and social security taxes and local and state sales tax, they are also asked to fork over an additional 6.25% of their income. I know some of you will say that they are rich and they can afford it, but I would like to think that one day I will be a millionaire and I don’t want to be punished just because I have made some wise decisions.

As parents, we reward our children for doing well. At work, we like it when our boss rewards us for doing our job better than anyone else. So why is it that we think it is ok to punish those making the most money? When the politicians in Maryland came up with this great idea, they expected to increase revenues into the state coffers to the tune of $106 million. However, when the numbers were tallied they were very surprised.

One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller’s office concedes is a “substantial decline.” On those missing returns, the government collects 6.25% of nothing.

Where did those 1000 millionaire families go? It is very likely that some of them weren’t millionaires this year because of the recession, however, it is also very likely that a lot of those families basically had had enough and moved to another state with a friendlier tax code. Unfortunately, the state still has a problem. How do they bridge the budget shortfall? More than likely, the burden will fall to those still in the state that are still paying taxes. You guess it…the middle class.

Today is Tax Day and all across the United States, legal, law-abiding citizens are doing something they would rather not do, but do so we can continue to be the greatest country in the world. They are paying their taxes. Whether you have already filed and received your refund or are a last minute filer because you owe taxes, paying taxes is a necessary evil to maintain the freedom we enjoy.

Taking the policies of the current administration out of the picture for a moment, we should all do our fair share to carry the load that freedom brings. The problem with most is deciding what our fair share really is. I am all in favor of a simple flat tax, where everyone pays a simple percentage of their income. I am not naive enough to think that even that idea has a few questions attached to it. The first is what about itemizing?

Regardless of which tax policy we have in place, today is the day we show our true patriotism by doing what is expected of us. I just checked our online account and verified that my $172 has been sent to Uncle Sam. What about you? Are you a late filer? Have you already received your refund? What are you going to do with it? Save it? Spend it? Invest it?

Each year around this time, millions of people begin the process of filing their taxes. Some hope for a large refund, while others (like me) hope that the amount being received or the amount being paid is as close to zero as possible. You see, if you are getting a large refund, that means that you have been paying the government too much money and they are simply returning it to you. If you are struggling to make ends meet, the extra money you need may be going to the government.

This is the first year that I have had to pay federal income tax. I will be sending Uncle Sam a very small amount, so I am ok with that. My state return shows that I over paid the Commonwealth of Virginia, so I will be getting a refund on that one.

Maybe you are in the group that hasn’t filed yet, because you have some questions. Today may be your lucky day (if you believe in luck). H&R block will be offering a Tax Advice Hotline today, April 7, for those who may have a few questions about their return. To access the hotline, simply call 1-877-HRBlock to talk to one of their representatives, but don’t wait. April 15 will be here before you know it, and even if you file for an extension, you still are required to send in at least 90% payment if you are going to owe this year.

How about you, have you already filed? Are you getting a refund? Are you paying Uncle Sam?