Georgia has an estate tax but does not have an inheritance tax. The difference between an inheritance tax and an estate tax turns on which person gets taxed once someone dies. An estate tax is a tax on the assets of a decedent's estate. A decedent is a person who passes away and leaves her assets to other people. The people who receive the assets are called "beneficiaries." An inheritance tax is a tax on the beneficiaries when they receive the assets.
Any estate taxes paid to the Georgia state government act as a credit for any estate taxes owed to the Internal Revenue Service (IRS) and federal government. In other words, Georgia estates are only subject to an estate tax to the extent they owe tax money to the federal government. If the estate owes money for the federal estate tax, the estate may pay Georgia estate taxes and deduct the amount paid from the amount the estate owes the federal government. In fact, Georgia only requires that the estate file a copy of its federal estate tax return (Form 706) with the Georgia Department of Revenue on the same day it's filed with the IRS. The estate's personal representative is responsible for filing both state and federal estate tax returns.
Three main criteria exist for an estate to be eligible for the Georgia estate tax. First, the death must occur in a year the IRS allows estates to deduct state estate taxes from federal estate taxes. Second, the decedent must have either resided in Georgia or held property in the state of Georgia. Finally, if an estate is not required to file an estate tax return with the federal government, then it need not file a Georgia estate tax return. As of 2009, only estates larger than $3.5 million dollars must file a federal estate tax return. However, the laws and requirements for federal taxes are subject to change. In 2010, the federal estate tax was suspended for one year, returning in 2011, but only for estates valued at $1 million or more.
If the personal representative fails to file and pay eligible Georgia estate taxes, the estate will be subject to penalties and interest. All estate taxes owed will accumulate interest while unpaid. In addition, the Department of Revenue will impose an additional 10-percent penalty against the credit the estate receives from the federal estate tax. In other words, if an estate owed $100,000 in estate taxes to Georgia, it could get a $100,000 credit against its federal estate tax. If the estate failed to file and pay its Georgia estate taxes, then the estate would lose 10 percent from its deduction, meaning the credit would be reduced to $90,000.