From Our “Ask a Question” Mailbag: “What are the major tax changes for 2025?”“ Major Tax Changes for 2025 Including Some Updates. Each year brings fresh hope for a better, brighter new year. And changes to the tax code. What is new and exciting in the world of taxes? I […]
Tag: Gift Tax
From Our “Ask a Question” Mailbag: “I want to start giving cash gifts to my children and grandchildren yearly. I know there is a Gift Tax Exclusion amount I can give away over my lifetime without paying any tax, but I am not sure how the Gift Tax works. How […]
From Our “Ask a Question” Mailbag: “My mother gave me a cash gift early this year. Do I need to report this on my income tax return? Is a gift subject to income tax?” Is a Gift Subject to Income Tax? At the end of the year, it is not […]
From Our “Ask a Question” Mailbag: “I would like to give my children a cash gift this year, but I hear it might be subject to Gift Tax. Is that true? How does the annual Gift Tax exclusion work?” What is Annual Gift Tax Exclusion? In short, the annual gift […]
From Our “Ask a Question” Mailbag: “Last year, I gave each grandchild the 2023 Annual Gift Tax exclusion of $17,000.00. What is the IRS Gift Tax Annual Exclusion for 2024?” IRS Gift Tax Annual Exclusion Rate for 2024. Now that 2023 is in the rearview mirror, it is time to […]
Rightfully so, much emphasis is being put on utilizing Gift Giving strategies that are scheduled to disappear on January 1, 2013. But when considering these strategies, don’t forget gift strategies that have worked in the past and continue to be cornerstones of most estate plans.
Take Advantage of The Annual Gift Exemption: When congress created the Gift Tax to plug loopholes that existed in the Federal Estate Tax, they created several categories of gifts that were considered “good gifts”, not subject to the gift tax. One of these exemptions is an annual gift to any number of persons. That rate is now adjusted for inflation, and for 2013 is a maximum of $13,000. Couples can lend each other the exemption so together can give $26,000 to any number of individuals. These gifts are then excluded from the estate and pass Gift and Estate Tax free to the recipient.¹
Only a little over three months remain to maximize estate tax and gift tax opportunities that are scheduled to disappear in 2013. There is still time, but if you are going to act you need to start working with your estate planning lawyer soon.
Never have the Gift Tax and Estate Tax exemptions been higher than they are currently. The Federal Estate and Gift Tax Exemptions are currently $5,120,000.00. If congress takes no actions, these exemptions fall to $1,000,000.00 in 2013. This change exposes to taxation an additional $4,120,000 to those who die or gift in 2013 vs. 2012, increasing the tax due by hundreds if not millions of dollars.¹
A revocable trust, or its more popular name a “Living Trust”, is an increasingly popular estate planning tool. The Living Trust serves many useful purposes, but many people are told that one purpose is to reduce taxes. This is not true. A Revocable Trust does not reduce income taxes, estate taxes, gift taxes, generation skipping taxes or inheritance taxes. In short, there is no tax advantage gained by a Living Trust. If someone is trying to sell you on the idea of forming a Revocable Trust based on tax savings, run away!
Some trusts do create various tax benefits. So why does a Living Trust provide no tax benefit?
