The Foreign Service Journal - January/February 2018

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2018 79 Es t a t e Ta x P l ann i ng , G i f t s and Re t i r emen t Con t r i bu t i on s In 2017, the first $5.49 million of a decedent’s aggregate estate was exempt from the federal estate tax. That amount will increase to $5.6 million for decedents ($11.2 million for a married couple) who pass away in 2018. The same amounts would apply to (and are reduced by) lifetime gift-giving over the annual tax-free gift exclusion. The limit on the exclusion for gifts given each year was $14,000 per person, per gift- giver for gifts given in 2017, increasing to $15,000 ($30,000 for gifts split by married couples). Finally in 2018, the limit on contributions to 401(k)s and TSPs will increase to $18,500. C i r c u l a r 230 No t i c e Pursuant to U.S. Treasury Department regulations, all state and federal tax advice herein is not intended or written to be used, and may not be used, for the purposes of avoiding tax- related penalties under the Internal Revenue Code or promot- ing, marketing or recommending advice on any tax-related matters addressed herein. TAX WITHHOLDING WHEN ASSIGNED DOMESTICALLY The State Department withholds an employee’s state taxes according to his or her “regular place of duty” when assigned domestically—for details, see “New Procedures for Withholding and Reporting Employ- ees’ State and District of Columbia Income Taxes,” Announcement No. 22394 (Nov. 4, 2014; available via the intranet). This reflects some jurisdictions’ impo- sition of income taxes on non-residents who derive income within their boundaries despite residence or domicile elsewhere. Members residing or domiciled in a jurisdiction other than the one in which they earn income may need state taxes to be withheld for their residence and domicile jurisdictions. If you reside or are domiciled in a jurisdiction other than that of your regular place of duty, you may secure an exemption from this withhold- ing method by satisfying the requirements detailed by CGFS Knowledgebase (available via the intranet at http://kb.gfs.state.gov/) Issue 39479. Note that the Bureau of the Comptroller and Global Financial Services does not adjudicate state income tax elections when you are serving overseas, since in those circumstances, it is the employee’s responsibil- ity to accurately designate a state for which income taxes will be withheld. However, on the employee’s return to a domestic assignment, CGFS will evaluate the employee’s state tax withholding election based on his or her new official domestic duty station pursuant to Announcement No. 22394. Finally, this determination does not mean that you must relinquish your state of domicile if it is different than your official duty station. “Domicile” and “resi- dence” are different concepts from “regular place of duty.” As long as you maintain your ties to your home state you will be able to change your withholdings, if you so wish, back to your home state when you go overseas. See the Overseas Briefing Center’s guide to Residence and Domicile, available on AFSA’s website at www.afsa.org/domicile.