North Carolina is one of the few states that imposes an estate tax on certain decedents who have property in the state or potentially other states and who died on or after January 1, 2011. The North Carolina Department of Revenue is responsible for collection of estate tax for the state.
Following is an overview of the estate tax laws in effect for North Carolina. If you are looking for information about federal income tax, please visit our web site’s “Tax Relief” page.
What are estate taxes?
A person’s estate refers to the property they owned and left behind when they died. This property will generally pass to another person, either by direction of the will of the decedent or through the probate process of the state that determines ownership of the estate.
For estates that exceed a certain amount, an amount that varies by state, the department of revenue for certain states and the Internal Revenue Service (IRS) for the federal government impose a tax on the estate. With the transfer of assets in an estate to a person, the person does not pay anything of value for the estate or pay tax on the estate. Therefore, the estate itself may be taxed. This is the estate tax.
Who is required to file an estate tax return in North Carolina?
The estate of a decedent must file an estate tax return when the federal estate tax applies to the estate and one of the following are true:
- The decedent was a resident of North Carolina who owned property located in North Carolina or another state, or
- The decedent was a non-resident of North Carolina who owned real property in North Carolina or personal property located in North Carolina.
What are the thresholds where estate taxes apply?
North Carolina has a minimum threshold of $5,000,000 before estate taxes apply to an estate. For any estate below this threshold no estate tax will be due.
What forms can I use to file estate taxes in North Carolina? And where should I send those forms?
North Carolina has requires that Form A-101 be filed with both the Internal Revenue Service as well as the North Carolina Department of Revenue. The copy of Form A-101 going to the North Carolina Department of Revenue should go to the following address:
North Carolina Department of Revenue
Post Office Box 25000
Raleigh, North Carolina 27640-0100
When are the forms related to estate taxes due in North Carolina?
The form must be filed no later than nine months after the date of the decedent’s death. Failure to remit the form and any payment due within nine months will result in a penalty and interest against the estate. If the estate tax form is not filed on time, the penalty incurred is 5% of the balance owed per month up to a maximum of 25%. If the entire balance of estate tax owed is not paid on time, a late fee of 10% of the unpaid balance will be incurred and interest will accrue until the balance is paid in full.
A representative for the decedent’s estate can request an extension of both the filing date and the payment of any estate tax owed depending on the circumstances. The request must be submitted in writing to the North Carolina Department of Revenue before the original due date.
How can I get help with questions about North Carolina estate taxes?
If you have questions about estate taxes for North Carolina or any other tax question, you should start by calling the telephone number located at the top of this page. You will be put in touch with a tax attorney who knows North Carolina estate tax laws and can answer your questions about how the law applies to your situation.
- Delaware Estate Taxes (taxlawhome.com)
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.