Many people wonder if it is a good idea to give their home to their children. While it is possible to do this, giving away a house can have major tax consequences, among other results. When you give anyone property valued at more than $13,000 in any one year, you have to file a gift tax form. Also, under current law you can gift a total of $5 million over your lifetime without incurring a gift tax. If your residence is worth less than $5 million, you likely won't have to pay any gift taxes, but you will still have…
Often, American citizens aren’t the only ones subject to American taxes. So, it isn’t only American citizens who have something to gain from the recent tax law changes. We’ve all been given a generous tax windfall for 2011 and 2012 when it comes to gift and estate taxes, and, according to a recent article in Private Wealth, it may be an especially windfall for wealthy non-citizens. For a wealthy non-citizen residing in the U.S., the problem is their possible tax liabilities lie within a hazy zone between a “domiciled resident” and a “non-domiciled resident.” The initial guidelines for determining domicile…
The economy is starting to show some life in a number of sectors but, unfortunately for many, the housing market is not one of them. The good news for the crafty estate planner is that the poor housing market coupled with the tax laws that went into effect with last December’s compromise offer a rather unique opportunity, one that may very well rate amongst the smartest estate planning moves one will ever make, according to Forbes columnist Rob Clarfeld. Now might be time to give away the house. The poor housing market remains perhaps the largest unhealed wound of the…
But the provisions in the Act are due to expire on the last day of 2012. It is unclear whether any provision will be extended into 2013 and beyond, so it is important to take advantage of the generous exemption while we are certain of its availability. If you own private business interests or other rapidly appreciating assets, and would like to gift those to the next generation at the lowest possible tax cost, you may want to act sooner rather than later. The Tax Relief Act of 2010 included a 400 percent increase in the lifetime gift tax exemption,…
The Internal Revenue Service has a low-profile but sweeping effort under way to use state land-transfer records for evidence of omissions in reporting gifts of real estate to family members. New tax rules make big gifts to family members popular this year. If you made a gift of real estate (or are considering making one) be warned – the IRS is scrutinizing land-transfer records looking for folks who may have made a reporting error. As The Wall Street Journal reports, the IRS has begun requesting state land-transfer records and checking them against reports of the past few years to find…
According to most tax experts, now is a fantastic time to give shares of a business to family members. As you may well know (if you follow this blog) 2011 and 2012 are have unique in terms of estate and gift tax planning. As one tax attorney was quoted in a recent New York Times article, “We are in the prime transfer tax situation.” However, having said that, there’s an old saying about not letting the tax tail wag the dog. While now may be the prime opportunity, tax-wise, to give away share of the family business to the next…
According to some barometers, there has been a recent surge in charitable giving over these, the first few months of 2011. Apparently, a good number of people have figured out that now is a good time to give. As a recent article on InvestmentNews.com reports, “The Vanguard Charitable Endowment Program, the nation's second-largest, collected about $129 million during the first quarter, a 60% in- crease over the same period a year earlier. Donations out of the $4.8 billion fund totaled $87 million, a 31.2% increase from $66 million.” Why the sudden increase? The new tax deal reached in December makes…
We frequently hear from individuals who have gifted $12,000 each to their children and grandchildren, over the past few years. However, this gifting is a myth. In fact, the $12,000 figure is now $13,000. But this is an IRS rule regarding filing a gift tax return. This has nothing to do with Medicaid law. If you make a gift, within five (5) years of qualification of Medicaid, you will penalized. For example. If you gift to your family $68,000, within the five (5) year period, you will be penalized for TEN (10) months, before you receive Medicaid. Therefore, who will…
It would be an understatement to say that the federal estate tax is in a state of flux. The current rules, with the generous $5 million individual exemption ($10 million for a couple), expire at the end of 2012. Last month, the Treasure Department released the “General Explanations of the Administrations’ Fiscal Year 2012 Revenue Proposals,” also known as the “Greenbook.” Perusal of the Greenbook reveals that the Obama Administration will be seeking to make some big estate tax changes. Return the Gift, Estate, and Generation-Skipping Transfer (GST) taxes to 2009 levels. The Greenbook proposes that in 2013 the exemptions…
As a recent Wall Street Journal Article points out, taking advantage of the low gift tax levels (while you still can) could save your family business a hefty amount in potential estate taxes. But transferring ownership can raise complicated succession and estate planning issues that you should consider carefully before giving away any stock. The recent tax law changes brought the gift tax threshold up to $5 million for an individual and to $10 million for couples in 2011 and 2012. Yes, that means you can give away that much now, without incurring a penny in gift tax. But, since…
Frederick, MD 
301-663-9230
