Free Online Article Directory. For Article Authors & Publishers
The Gift Tax in Layman Terms
Few people in America truly understand how the federal gift tax regulation really works, even though every year millions of people give away gifts to other people that they know. Some people mistakenly think they will get a deduction for a gift to a friend or relative. Actually, it works a bit differently. The gift tax is applicable whenever there's a transfer of any kind of property. In other words, you are considered to have made a gift if you give property (including money), or the use of income from property, without expecting to receive something of equal value in return. The fact that they specify "something of equal value in return means that if you sell something for less than its full value or make an interest-free loan to someone, those transactions can be considered as gifts by the IRS.
According the Internal Revenue Service (IRS) an individual who gives a gift or a combination of gifts to one person that is valued at over thirteen thousand dollars must pay a gift tax. To be completely clear, it's the gift giver's responsibility to report and pay the tax, by filing the Form 709: United States Gift Tax Return, which which is available on the IRS website. Gifts that are recognized by the government include real estate property, money, fine art, jewelry, and so on.
So you can legally give someone a gift of up to thirteen thousand dollars in value without incurring a gift tax. That amount is the Annual Exclusion Amount. It can be combined in the case of a husband and wife, meaning that the couple can gift up to twenty-six thousand dollars without triggering the tax. On top of that exclusion amount, there's the lifetime gift tax limit, and that limit is one million dollars. In layman terms, your yearly gifts are tallied (whether they exceed the annual exclusion or not); once you pass one million dollars in total gifts, anything in excess of that amount is falls under the gift tax, at rates varying between 37% and 45%.
There are exceptions to the gift tax. They include tuition or medical expenses you pay for someone (the educational and medical exclusions), gifts to your spouse, gifts to a political organization for its use, and gifts to qualified charities (a deduction is available for these amounts). In the case of the educational and medical exclusions, you must be careful. It's crucial that the person giving the gift pays the bill directly to the educational institution or medical provider for the exclusions to kick in. If the recipient has already paid for them and you reimburse them, that amount will be subject to the annual exclusion limit.
A lot of people make use of the gift tax limit for estate planning purposes, in order to limit the size of their estate when they die and limiting the tax bill on their estate after their passing. In addition to its obvious tax benefits, a gift is very often a great way for people to give back to their relatives, friends, or their community.
Payroll taxes can be confusing for business owners. There are many different types of payroll taxes, including both federal and state withholdings. In Nevada, individuals and businesses are not required to pay a state income tax, but business owners are responsible for several state payroll taxes, like the UI Tax and the Modified Business Tax.
Nearly everybody recognizes lottery winnings can utterly improve a individual's way of living. Individuals often dream about winning huge lottery jackpots to enable them to cease being tied down to ajob and spend their days and nights having fun on luxurious luxury yachts, taking a journey around the world, or anything else that captivates their soul.
Do you have piles of papers, stacks of statements and drawers stuffed with receipts? Part of preparing for tax season is being organized. The last few days of the year are as good a time as any to invest a few hours in organizing your piles.
This article describes the nature of the 2001 and 2003 Bush administration tax cuts and details the history of the legislation. It explores economic projections about the cuts and the current Obama administration proposals.
Whether it's your home or your business the truth is that doing taxes yourself is never fun. This is especially true if you are dealing with complex issues, which most people are when they get to a certain age. How do you know what amount of money goes where on a tax form, or what counts as a write-off.
The everyday use of professional income tax software is becoming vastly popular. Using a tax software makes filing your taxes to the IRS fast and easy. This may be a reason that it is becoming popular or because people like to keep files on their taxes which most softwares do for you. Tax softwares normally come with files that you fill out. Such as family, house, and marriage files.
Owing money to the IRS can have destructive consequences if action isn't taken. Hiring a CPA can be the best way to avoid losing your home to the government. A qualified CPA can file the necessary forms, develop the best strategy, and represent you before the IRS. With the aid of a CPA, you can reduce the amount of taxes that you owe.
A newly married couple has many things to remember to do after they are married and tax related items might not be high on their list, or even on the list. After getting married, it is important to remember to change your name, address and to decide the best way to file your tax return.
There are many kinds of tax preparation services and tax planning professionals. Some of these are Enrolled Agents, CPA's, and attorneys. What is the difference between a tax preparation service and an Enrolled Agent?
![[Valid RSS feed]](http://www.articlelisted.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Harold Dailey's Author Feed
Print This Article
Add To Favorites 