YEAR END REMINDERS
If you plan to make cash gifts to relatives during the holiday season...
Remember to use the benefits of the $13,000 annual exclusion for gifts. This is a very easy way for individuals to reduce their future estate tax liability. Each year you can give up to $13,000 free of gift tax to a child, a grandchild, or anyone else. The cap is $26,000 per recipient if you are married and your spouse concurs in the gift, even if the entire amount of it comes from one spouse’s assets.
Larger size gifts can pay off as well. No gift tax is due on amounts in excess of $13,000 unless you have used up your $1-million lifetime exemption. Also, any future increase in the value of assets you give is excluded from your estate. There’s an unlimited break for tuition that donors pay directly to schools. It doesn’t count toward either the $13,000 annual exclusion or $1-million exemption. The same goes for medical expenses that donors pay on behalf of donees. If you give securities, endorse them over to the recipient. On yearend gifts, companies may not be able to re-title the certificates in the donee’s name by Dec. 31.
If you are giving a check, be sure that the donee deposits the check in 2009 if you want the money to count as a 2009 gift for gift tax purposes. Alternatively, deliver a certified check to the recipient this year. That will count as a 2009 gift, even if the donee does not deposit the check into his or her account until next year.
Did your child or grandchild work this year? A Roth payin is a great gift. You can give $5,000 or what the child earned, whichever is less. But keep in mind that the gift does count toward the $13,000 or $26,000 annual gift tax exclusions.
A Roth can grow into a nice nest egg, especially if you keep making payins each year.
If you plan to make cash gifts to relatives during the holiday season...
Remember to use the benefits of the $13,000 annual exclusion for gifts. This is a very easy way for individuals to reduce their future estate tax liability. Each year you can give up to $13,000 free of gift tax to a child, a grandchild, or anyone else. The cap is $26,000 per recipient if you are married and your spouse concurs in the gift, even if the entire amount of it comes from one spouse’s assets.
Larger size gifts can pay off as well. No gift tax is due on amounts in excess of $13,000 unless you have used up your $1-million lifetime exemption. Also, any future increase in the value of assets you give is excluded from your estate. There’s an unlimited break for tuition that donors pay directly to schools. It doesn’t count toward either the $13,000 annual exclusion or $1-million exemption. The same goes for medical expenses that donors pay on behalf of donees. If you give securities, endorse them over to the recipient. On yearend gifts, companies may not be able to re-title the certificates in the donee’s name by Dec. 31.
If you are giving a check, be sure that the donee deposits the check in 2009 if you want the money to count as a 2009 gift for gift tax purposes. Alternatively, deliver a certified check to the recipient this year. That will count as a 2009 gift, even if the donee does not deposit the check into his or her account until next year.
Did your child or grandchild work this year? A Roth payin is a great gift. You can give $5,000 or what the child earned, whichever is less. But keep in mind that the gift does count toward the $13,000 or $26,000 annual gift tax exclusions.
A Roth can grow into a nice nest egg, especially if you keep making payins each year.
One more thing....start bookkeeping now...
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