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Estate tax bonanza for D.C.

April 23, 2011

What a difference a year makes.

Estate_tax2 The nation's capital has collected $29 million so far this year in estate taxes.

Actually, that's just money taken in through February. And it's already very close to District of Columbia chief financial officer's projection that the city would collect a total of $35 million this year.

"I hesitate to say we will collect more estate taxes because that would mean some untoward happening in certain parts of the city," D.C. CFO Natwar Gandhi told the city council last week.

Gallows humor aside, the money is quite welcome by the leaders of America's capital city, which is facing a $322 million shortfall.

They've been exploring new ways, such as imposition of tax on professional athletes, to raise money. But the unexpected estate tax windfall could make the jock tax and other potential tax hikes on D.C. residents less pressing.

Federal, state estate tax connection: The federal estate tax disappeared from the Internal Revenue Code in 2010. Many state that based their collections on the federal levy saw their estate taxes phased out earlier than that.

But the District decoupled from the federal system and continued to collect from estates.

The District does have, however, a lower estate tax limit than Uncle Sam. Estates valued at $1 million or more must pay the Washington, D.C., estate tax. The federal threshold that took effect with the Jan. 1 resurrection of the estate tax is $5 million.

And now that the federal estate tax is back, it will be interesting to see how much money the levy will return to treasuries at all levels of government.

The forgone revenue — Steinbrenner and Duncan, just to name a couple of mega estates that went untaxed in 2010 — that will be coming back into coffers could be key in determining whether any states or Uncle Sam will be able to permanently killl the estate tax.

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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Comments
  • Rob Smith
    16 years ago Reply

    In the Federal City – we need a revelution on Estate Taxes: Pay the government in a way that doesn’t destroy jobs or the asset itself.
    The Americans Standing for the Simplification of the Estate Tax – ASSET, have developed a method to do just that.
    By allowing people to pay the estate tax, based on their AGI of 1 Million or more, each year, you pass assets to heirs at original basis. Guess what…the DC government will more than recoup it’s money when the capital gains tax is paid on the sale of those assets if, and when, they are sold. If they are not sold, because the private business is still going with the heirs, DC benefits from the jobs that are still paying taxes.
    It’s a good idea. Check out SimplifyEstatateTax.org

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