End-Of-Year Estate Planning
As we march quickly through the last quarter of 2008, consider
the following for this year and for 2009.
2008 Annual Exclusion Gifts - $12,000
In 2008, you may give up to $12,000 to any person without
incurring gift tax and without using any of your $1 million gift
tax exclusion. If you are married, your spouse also may give
$12,000 to the same beneficiary or beneficiaries. Moreover, with
some exceptions, annual exclusion gifts need not be reported on a
federal gift tax return. A $24,000 annual exclusion gift to a
beneficiary on behalf of both spouses but made from one
spouse's individual funds (rather than $12,000 from
each spouse) is called a "Split Gift." Split Gifts must
be reported on a federal gift tax return even though they qualify
for the annual exclusion.
Gifts to minors should be made to trusts for their benefit, to
Uniform Transfers to Minors Accounts, or to education accounts such
as the so-called "529 Accounts" (which grow income-tax
free). You may apply five (5) years of your annual exclusion for
gifts in one year to a 529 Account ($60,000 to each child's
account), provided you have not used up your annual exclusions for
this year on prior gifts to the child. Gifts to 529 Accounts in
excess of the annual exclusion (e.g. $60,000) must be reported on a
federal gift tax return even though the gift qualifies for the
annual exclusion from gift tax under the special rules for 529
Accounts.
When determining how much annual exclusion you have available to
give to a beneficiary, (i) be sure to count the
beneficiary's share of insurance premiums contributed by you to
any Insurance Trust; but (ii) don't count any gifts for
education tuition or medical expenses that you paid directly to a
school or medical provider. Gifts made directly for tuition and
medical care are not taxable, they are not counted toward your
annual exclusion, and they do not reduce your $1 million gift
exclusion.
2008 Kiddie Tax Rules
Beginning in 2008, the kiddie tax applies to: (1) children under
18; (2) 18-year old children with unearned income in excess of the
threshold amount, who do not file a joint return and who have
earned income that does not exceed one-half of the child's
support amount; and (3) children between the ages of 19 and 23 if,
in addition to the above rules, they are full-time students. For
2008, the kiddie tax threshold amount is $1,800.
2008 And 2009 Charitable Donations From IRAs
If you are have reached age 70 ½, you may deduct
donations...
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