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Answering a Common Tax Question

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · November 1, 2012 ·

People often ask San Diego estate planning lawyers about the taxes that must be paid when gifts are given. A common question involves reporting a cash gift as income when you are filing your tax returns.

The fact is that you do not have to include cash gifts that you receive because they are not considered to be taxable income. But that does not mean that there are no taxes involved in gift giving.

In truth the taxation started when your income was taxed. You may then take some of the remainder and give it to someone as a gift. It would be logical to assume that you have paid your taxes and there should be no further levies pending.

Unfortunately there is indeed a gift tax in place and it is unified with the federal estate tax.

However, there is an annual exemption. You can give someone a gift totaling as much as $13,000 within a given year (increases to $14,000 in 2013) before the estate tax kicks in. It should be noted that you could give this $13,000 to any number of individuals in a tax-free manner.

It is possible to utilize some of your lifetime estate/gift tax exclusion to give gifts above and beyond $13,000 per person per year. However, you must be aware of the fact that you would be reducing the amount of the exclusion that would be left to be applied to your estate at the time of your passing.

TWO TRUSTS TO CONSIDER

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · February 24, 2012 ·

 

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Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old. Richard McClintock, a Latin professor at Hampden-Sydney College in Virginia, looked up one of the more obscure Latin words, consectetur, from a Lorem Ipsum passage, and going through the cites of the word in classical literature, discovered the undoubtable source. Lorem Ipsum comes from sections 1.10.32 and 1.10.33 of “de Finibus Bonorum et Malorum” (The Extremes of Good and Evil) by Cicero, written in 45 BC. This book is a treatise on the theory of ethics, very popular during the Renaissance. The first line of Lorem Ipsum, “Lorem ipsum dolor sit amet..”, comes from a line in section 1.10.32.

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Taxes

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · December 19, 2010 ·

Congress did it! The Bush tax cuts have been extended, which means that no one should get a tax increase come Jan 1st..In fact, if you’re working, your social security withholding will be decreased (but it may take til 1/31 to see the results). Most significantly, we have the Obama tax cuts for estate taxes. The new exclusion is $5 million, and you can also give that amount away during your lifetime. Step-up basis is back, and the estates of those who died in 2010 get to choose if they want the 2010 law to apply or the 2011 law. Biggest negative? It’s only good for two years!

Tax Update

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · December 13, 2010 ·

The Obama-Republican tax deal (an extension of the Bush tax cuts) have enough votes in the Senate. Even better, it includes a $5 million estate tax exemption and 35% tax on the excess. But, like all good things, it comes to an end..this time in two years. The difference is that this time the $5 million can be gifted during life and is also free from Generation-skipping tax..the only problem is whether the House will go along…Stay posted!

Taxes

Courtesy of Armstrong, Fisch, & Tutoli Attorneys at Law · December 6, 2010 ·

President Obama and the Republicans agreed today to extend the Bush tax cuts for all and to set the estate tax exemption amount at $5 million. Now the Democrats have to be convinced. Extending jobless benefits is one carrot, wouldn’t be surprised if the compromise reduces the exempt amount to $3.5 million…

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WHERE WE ARE

Armstrong, Fisch & Tutoli, Attorneys at Law
6050 Santo Road, Suite 240,
San Diego, CA 92124
Phone: 858-453-0626

Securities offered through Avantax Investment Services SM, Member FINRA, SIPC. Investment Advisory Services offered through Avantax Advisory Services SM. Placing business through Avantax Insurance Services SM. CA# 0D57837

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