Gift Tax - Does this apply to me?
Here we all are poised to enjoy another Christmas holiday season with all the excitement of giving the perfect gift to our loved ones. In all the excitement, we might forget some important tax implications.
Each of us can give $15,000 in gifts each year to as many individuals as we want. Remember, you count the whole calendar year, not just Christmas. If you gift cash to a loved one throughout the year, be careful your Christmas gift does not throw you over $15,000. If it does, you owe the IRS a gift tax return on Form 709. With a transfer tax exemption of $11,180,100 available to each of us, it is unlikely you will owe gift tax but the gift tax return is still required.
Remember that gifts of stock transfer your basis (cost) to the recipient. Do not gift low-basis stock to a loved one as you saddle him or her with paying capital gains tax if he or she sells the stock. On the other hand, highly appreciated stocks are excellent gifts to charity. You get a charitable deduction for the full value, not just your basis.
When the excitement of the holidays is past, we think about income tax that for most of us is due April 15. Please start pulling your records together as early in the New Year as possible. We have a new tax act that applies for 2018. Most itemized deductions have been eliminated and many more have been reduced. The standard deduction is now much larger. Medical and charitable deductions are still available so pull these records especially. If you own and operate a business as a sole proprietor or an S Corp or LLC you may be eligible for some write-offs through the business but not as an individual. Plan a visit with your tax return preparer in January to guide you in pulling records and receipts.
Thank you for your interest in our blog article, we hope it was informative. If you have further questions regarding taxation and how it relates to your estate planning please give us a call, we are here to help.
From all of us here at The Payne Law Group, we wish you a Merry Christmas and a Happy Holiday Season!