Gift Tax Planning Basics

July 22, 2016

Gift tax planning refers to legal transfer of assets from one individual to another. The term is often intertwined with estate tax planning, with both affecting your wealth and the wealth of those you care about. Allow the experienced Los Angeles accountants at Wallace & Associates to help you with the basics of gift tax planning to protect assets and avoid issues with the IRS:

Exemptions

Certain gifts are exempt from taxation, and it’s essential to understand what these exemptions are to sidestep legal grief. Examples of exempted gifts include gifts valued at $14,000 or less to one person within a calendar year, gifts to spouses, charitable contributions, gifts of tuition, gifts covering medical expenses, and specific gifts to political organizations.

Gift Tax

Gift taxes are applicable when a person gives a gift to another, though not for the gift’s full value. The giver must subsequently pay a gift tax. The receiver may choose to pay part of this tax on behalf of the giver. Your Los Angeles accountants note rules and regulations surrounding gift taxation change regularly, making it necessary to work with a reputable CPA firm whose staff can walk you through the process.

Unified Gift Tax Credit

In terms of tax codes and rules, a credit is something that lowers the amount of tax paid. Such credits may eliminate the tax entirely if large enough. Unified credit applies to gift taxes; it is a lifetime credit taxpayers must apply to taxable gifts for that year. The lifetime credit totals $345,800, and gets reduced each time the credit is applied to gift taxes.

If gift tax planning is something you require, contact the Los Angeles accountants at Wallace & Associates today. Team members will help you make certain your loved ones are taken care of as you desire, and all other wishes are carried out.

Contact Wallace & Associates today for more information.