Archive for Gift Tax

The Gift Tax In A Nutshell

Cash wrapped Gift Box

a. How the Federal Gift and Estate Tax Work Together

The federal gift tax is part of what’s called the “unified” federal gift and estate tax. Gift tax applies to lifetime gifts; estate tax applies to assets left at death. The idea is that whether you give assets away while you’re alive, or leave them at your death, they’re taxed the same way, at the same rate. After all, if there were no gift tax, then anyone could completely avoid the estate tax by giving everything away just before death.

Very few Americans need to worry about federal estate tax or the federal gift tax. Why? Because under current law, each of us has a lifetime gift and estate tax exemption of $ 5.25 million, which means that you can leave or give away up to $ 5.25 million without owing any Read more

Last Call for Tax Deductions

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There is about a week left for 2013 which means this is the last call for most tax deductions. Sure, there a few things you can still do in April when you are filing your return but the vast majority of tax deductions must be taken care of before the end of the year. It’s the holiday season so tax deductions are not likely to be on top of your to-do list, but maybe they should be.

Charitable contributions need to be made before year-end. That includes donations of appreciated stock which need to be transferred into the charity’s account before January. Sometimes the paperwork for transferring securities can take a day or two, so don’t wait until 4:00PM on New Year’s Eve to start the process. Read more

New Jersey Estate & Inheritance Tax: Reducing the Size of the Estate Through Gifting

Cash wrapped Gift Box

New Jersey is one of only a few states that impose both an inheritance tax and a state estate tax. The inheritance tax applies when someone who lived in New Jersey, or owned property there, leaves property to someone who is not a close relative. The tax rate depends on how closely the inheritors and deceased person were related.

(1) How are inheritors classified?

The transfer inheritance tax is imposed, at graduated rates, on property having a total value of $00 or more that passes from a decedent to a beneficiary. New Jersey classifies inheritors into different groups, based on their family relationship to the deceased person. Read more

Don’t Look A Gift Horse In The Mouth: All About Gifts And Taxes

Cash wrapped Gift Box

It’s the proverbial time of the year when there are a lot of gifts exchanged. Some are store bought, some gift cards & there are those who just get plain ol’ cash.

What constitutes a “gift” in the eyes of the IRS?

• You make a gift if you give property, including money, or the use of or income from property, without expecting anything of equal value in return.
• You also make a gift if you sell something at less than its full value
• There’s a gift made if you give an interest-free loan or reduced interest loan Read more

Desperate For Your Money – IRS Gift Tax Audits On The Rise

TaxConnections Blog PostThe IRS has been embarking on a new initiative: Track down and catch US Gift Tax evaders who have transferred real property to family members any time since 2005 without paying Gift Taxes owed. The IRS estimates that between 60% and 90% of taxpayers that transfer real property to family members fail to file and pay Gift Tax. In an attempt to raise desperately needed funds for the US Treasury, IRS started its Gift Tax compliance program in earnest by using the increasingly more popular tax enforcement tool called the “John Doe” summons.

Use of the John Doe Summons

When the IRS issues a “John Doe” summons to a party (most of us are now very familiar with this powerful tool due to the robust enforcement actions against the Swiss banking industry) it essentially compels that party to produce information requested by the IRS. The summons does not identify the persons with respect to whose tax liability it is issued since the IRS would not have the taxpayers’ names. In the Gift Tax Compliance Program, the IRS has been issuing John Doe summonses to State property tax authorities or State real property title offices. The summons typically requests identification of transferors of real property who did not charge the recipient at all or only charged a nominal price. Typically these are gifts of real property made between family members and in the usual case, Gift Tax was never paid on the transfer. Read more