Dallas county tax office
Clients also need to be aware of the fact that North Carolina is not in full conformity with the federal transfer tax system and it can be costly for North Carolina residents to effectively use the estate and gift tax system for lifetime gifts. dallas county tax office Georgia-state-tax. New Estate Tax. Under federal estate tax rules, a decedent''s estate is given a "Credit for State Death Taxes" subject to limits contained in a schedule contained in the Code. This credit is not available unless the amount of the credit is actually paid to the state in question. dallas county tax office Sales tax. Many states have abolished their separate estate and inheritance tax systems and have adopted a "pick-up" system that requires the estate to pay to the state the amount that is allowed as a credit by the federal system. While "arriving late for the dance" by doing this after most other states, North Carolina has now adopted a "pick-up" tax system. The effect of North Carolina''s new estate tax being tied to the state death tax credit allowed for federal estate tax purposes is that our residents will automatically receive the benefit of the federal applicable credit amount as it increases to $1,000,000 on January 1, 2006. dallas county tax office Nys income tax. As an example, if a North Carolina resident dies in 1999 with a taxable estate of $750,000, the tentative federal estate tax is $248,300, reduced by the applicable credit of $211,300 and by the credit for state death taxes of $20,400, for a net estate tax due to the I. R. S. of $16,600. Under the new North Carolina estate tax, the estate will owe North Carolina $20,400, the amount allowed on the federal return as a credit for state death taxes. Unified Federal Transfer Tax System. For federal tax purposes, the estate and gift tax systems are "unified", that is, the tax rates for transfers at death and for lifetime gifts are the same and the federal system provides an "applicable credit" which allows a person to transfer $650,000 by gift or at death in 1999. This "applicable credit" will increase yearly until January 1, 2006 when it will protect transfers of $1,000,000 from estate and gift tax. Other Related Gift Tax Rules. North Carolina is already consistent with the federal system in allowing an unlimited marital deduction for transfers between spouses during life and at death. Therefore, there is no tax cost to couples who need to rearrange the ownership of assets between themselves. In addition, both North Carolina and the federal system allow a person to make tax-free gifts of $10,000 per year to any number of donees. Both systems allow a husband and wife to treat a $20,000 gift by one spouse as a "split-gift", thereby allowing both spouses to obtain the benefit of a $10,000 annual exclusion even though one spouse owned all of the property that was given away. Unfinished Business. Despite the inheritance tax repeal which gives North Carolina residents the benefit of the full applicable credit amount for transfers at death, North Carolina has not fully unified its estate and gift tax system. For federal transfer tax purposes, the applicable credit amount of $650,000 can be transferred during life or at death without tax. North Carolina''s gift tax law retains several undesirable features:* North Carolina only allows gifts of $100,000 during life without gift tax. * North Carolina retains different tax rates depending on the relationship of the donee to the donor, so North Carolina residents are penalized if they choose to make gifts to siblings, in-laws, loyal employees, etc. , as opposed to gifts to children and grandchildren. * The $100,000 exemption for lifetime gifts is only available for gifts to children, grandchildren, stepchildren and parents, a fact which often surprises taxpayers who want to make gifts to spouses of their children. The result of North Carolina''s retention of separate estate and gift tax systems is that it can be very expensive for a North Carolina resident to take advantage of the applicable credit amount by making a lifetime gift.
Dallas county tax office
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