President Trump’s tax plans includes the repeal of the US Estate & Gift taxes. This may be a realistic possibility considering that this is in line with some of the proposals in the Republican House Ways & Means Committee Report of June 24, 2016 and especially when you consider that now the Republican’s Control both the Senate and the Congress.
Tag Archive for Gift Tax
The key to transferring large amounts of wealth was discussed 2000 years ago by the patron saint of estate planning attorneys, Archimedes.
Regarding leverage he observed, “Give me a place to stand and I will move the earth.” Using leverage to move the earth—or to move your wealth—is the key to achieving noteworthy results. Each U.S. resident can give away, during lifetime, $5 million as well as the current annual gift exclusion.
If you gave any one person gifts valued at more than $14,000, it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift.
The person who received your gift does not have to report the gift to the IRS or pay either gift or income tax on its value.
You make a gift when you give property, including money, or the Read more
U.S. citizens or long term residents who are covered expatriates who gift property during their lifetime or have bequeathed property upon their death, to a U.S. citizen or U.S. resident will cause the recipient of the gift to pay gift tax to the extent that the taxable gift exceeds the annual exemption. For 2015, the annual exemption is $14K. For this purpose, resident is one who is domiciled in the United States.
There are also similar rules or application where the recipient is a U.S. trust. Recipients of a “covered gift” or of a “covered bequest” who are charities are exempt from paying the gift tax.
Therefore any U.S. citizen or long-term resident who has expatriated under S877 of the IRS Code AND who is classified as a “covered expatriate” under S877A of the IRS Code will cause the recipient to pay this tax. The tax Read more
If you gave money or property to someone as a gift, you may wonder about the federal gift tax. Many gifts are not subject to the gift tax.
Here are seven tax tips about gifts and the gift tax.
1. Nontaxable Gifts. The general rule is that any gift is a taxable gift. However, there are exceptions to this rule. The following are not taxable gifts:
• Gifts that do not exceed the annual exclusion for the calendar year,
• Tuition or medical expenses you paid directly to a medical or educational institution for someone, Read more
Tax Code Changes Create Challenges
Inheritance taxes and estate planning are a growing concern for affluent baby boomers. What are some of the major issues?
In addition to the double step-up in basis on community property discussed above, the baby boom generation will benefit from some of the most generous estate tax loopholes in history. For example, married couples have complete spousal exemption from estate and gift tax when transferring property to each other. This has not always been the case.
For 2015, every person has a lifetime net gift and estate tax exemption up to $5.43 million. Considering that the top gift and estate tax rate is 40%, this exemption represents an Read more
The IRS 2012 Data Fact Book reports that 258,393 gift tax returns (Forms 709) were filed that year compared to 219,544 in 2011. The most striking difference between the two years is the aggregate amount of the gifts, which totaled about $135 billion in 2012, reflecting an increase of $84 billion, or 165 percent, over the 2011 total of $51 billion. Many 2012 gift tax returns were filed in 2013 because the Internal Revenue Service allowed the taxpayer to submit Form 709.
Have a Gift Tax Audit Problem? Gift Tax Audits Require an Experienced Tax Attorney.
Someone recently asked me what federal tax issues are still outstanding regarding DOMA and the effect of the June 2013 Windsor decision. There are still a few income tax issues that come to mind (there are also estate and gift and state tax issues as well), that were not covered in the initial guidance (Rev. Rul. 2013-17). Here is my list. Do you have any input or additional ones to add?
Will the IRS issue guidance to assist in the filing of amended returns? The current version of Form 1040X is not conducive to showing how two prior separate returns will now be treated as one MFJ return. Read more
Evaluation of Senator Suggestions for the Blank Slate Project
As noted in my 9/9/13 post, I’m going to summarize and analyze proposals senators offered to the Senate Finance Committee, and that the senator made public. Despite falling behind on my project, as tax reform likely heats up in 2014, I’m back at it as I’d like to look at and share what might be a broader array of proposals and issues. In no particular order, the second set of suggestions I’m commenting on are from Senator Rockefeller (D-WV) (7/26/13 letter). Senator Rockefeller is a member of the Senate Finance Committee.
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
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
After a lifetime of working, retirement sounds like it would be fun. When you get to retirement there are lots of changes in your life and one of them should be your estate planning. At this point your kids are grown and maybe you have grandchildren. Reworking your will and trusts to include grandchildren and account for other changes in the family can be important.
Gifting can play a major role in your estate planning. In Minnesota, the estate and gift exemptions are only $1M so annual gifts can be useful in keeping an estate under the $1M threshold. A couple of kids plus spouses, plus a few grandchildren can make for a big gifting base. In 2013 you can gift $14,000 to each person without filing a gift tax return. If you are so inclined, you could gift $14,000 to each person and quickly reduce the assets in your estate.
Another way to change your estate planning is to change the beneficiary designations on your retirement plan accounts. IRAs and 401ks can be a great way to skip generations in your estate planning. When a non-spousal beneficiary receives an IRA or 401k from an estate, they are required to make minimum distributions each year. Those minimum distributions are based on the age of the beneficiary. A 55 year-old child that inherits an IRA will need to withdraw 3.4% each year, while a 25 year-old grandchild only has to withdraw 1.7% each year. That can make a huge difference over time as the account grows tax free. Each family situation is different and the needs of the family and each beneficiary can vary, but it’s important to update your estate planning at each stage of your life.