Tax Tip On The Gift Tax: Use It Or Lose It
One of the least-understood tax rules is the federal gift tax
. Gift taxes are paid by the grantor, not the recipient. But taxes are seldom owed, even on substantial gifts, because everyone gets a credit that exempts up to $1 million of taxable gifts over your lifetime.
Still, you must keep track of your largess and file a gift-tax return Form 709 for any gift to an individual that exceeds the annual gift exclusion, which is $13,000 this year. You can give $13,000 each to any number of individuals without worrying about the gift tax. You and your spouse can give up to $26,000 of either one of your assets per person, as long as the spouse agrees not to give the person another dime during the year.
You dont get an income-tax deduction for such gifts, but theres an important advantage: Assets given away during your life and any future appreciation wont be in your estate to be taxed after you die.
Why worry about the gift exclusion as an end-of-year maneuver? If you dont use your $13,000 annual exclusion by December 31, you lose it forever. Each New Year presents you with a new exclusion, but you cant reach back to benefit from a previous years unused allowance. Next year, the gift-tax exclusion will remain at $13,000.
Assume, for example, that a couple plan to give $50,000 to their son. If they give him all of the money during one calendar year, only $26,000 of the gift would be sheltered from the gift tax. The other $24,000 would eat into the credit that shelters $1 million of taxable gifts. However, if $26,000 was given in December and the balance in January, the full $50,000 would be protected. If you make a gift by check, be sure the recipient cashes it before the end of the year because when it comes to gifts, the IRS considers it given in the year the check is cashed.
Another option is to fund a 529 state-sponsored college-savings plan for your child or grandchild. You can contribute up to five years worth of gifts at once, meaning you could contribute up to $65,000 per child or up to $130,000 if you and your spouse make a joint contribution this year. Contributions to 529 plans are not deductible on federal tax returns, but some states offer deductions on state returns.
http://versatiletax.com
by: Mary Beth Franklin
#
2
I recently tried
full spectrum cbd gummies for sleep for the first prematurely and was pleasantly surprised past the results. Initially skeptical, I initiate that it significantly helped with my anxiety and slumber issues without any remarkable side effects. The grease was unoppressive to use, with nitid dosage instructions. It had a indulgent, earthy grain that was not unpleasant. Within a week, I noticed a marked improvement in my total well-being, instinct more relaxed and rested. I cognizant the natural technique to wellness CBD offers and representation to continue using it.
2024-2-20 10:31
reply
10 Common Misconceptions About Tax Returns Benefits Of Expat Taxes For Australians Tips For Finding A Tax Professional To Help You To Fight Against Irs 2010 Seattle Seahawks: NFL Schedules, Predictions and Odds 2010 NFL Predictions: Arizona Cardinals 2011 nfl super bowl information Are You Confused On How To File Your Back Taxes? 2010 Miami Dolphins: NFL Schedules, Predictions and Odds Importance Of Personal Finance Useful Guide Identity Theft at Tax Time - Be Wary of Thieves Former NFL players eat cake and take it too on USO tou The Outlook for Taxes in 2010 7 Secrets the IRS Doesn’t Want Taxpayers to Know