The IRS instructions to Form 709 Gift Tax Return spell out the general rules for allocating the unified credit to prior gifts. For 2017, the annual gift tax exclusion is $14,000. That means you can give up to $14,000 to as many different people as you want as a gift without being subject to gift tax rules. Read More
For those of us navigating the treacherous seas of estate planning, we have to deal with the monstrous GSTT aka Generation Skipping Transfer Tax at some point or the other. Swimming through all the complications, we can many a time whittle it all down to a simple set of circumstances to watch for when your clients would be subject to GSTT. But before we can do that, we need to know the following:
What is GSTT?: If some or all of your estate bypasses your children and goes directly to a grandchild, there is another tax on your estate called the generation skipping transfer tax.
Although it wouldn’t serve to pay this tax intentionally, in some circumstances, this could be unintentional. If the inheritance is in a trust, the heir dies after the client but before Read More
Beginning in 2011, the Internal Revenue Service started cracking down on taxpayers who did not file gift tax returns after making gifts that required reporting. Working with state or county agencies, the IRS started using real estate property records to spot land transfers between family members for no or little consideration, according to an October 2011 Forbes magazine article. Taxpayers who are caught not filing a gift tax return and owe taxes can count on paying the failure-to-file penalty along with interest charges.
a. Who Must File
You do not have to file a gift tax return as long as the amount you give to one person does not exceed $ 14,000 (for the 2013 calendar year). If you are married, you and your spouse Read More
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