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Feb 23
Love0

Why do you Have to Worry about Gift Tax?

By Gift Tax, Tax

Why do you Have to Worry about Gift Tax?

 

Well, you probably won’t have to worry about gift tax. Most people don’t, but the reason it’s there is so that people can’t make deathbed gifts and get rid of their estate for tax purposes.

The gift tax works in conjunction with the Federal Estate and Gift Tax. It’s all one thing. And so the reason being that you know, if technically you had $20,000,000 and some of it would be taxed at your death, and there at your deathbed, you know you’re going to die tomorrow, you give it all away to like your son and then take it all out of your estate.

The estate tax wouldn’t work if you could do that, so they make it so that if you make gifts over the annual exemption amount, which is $16,000 in 2022, you need to file a gift tax return. Gifts in excess of the annual gift exclusion amount go against your lifetime gift and estate exemption. So if you make a big gift this year, all it does is brings down the amount that is exempt later, so you still have that whole total amount and so if you are concerned about these things, give us a call (267) 573-1019.

Feb 09
Love0

What is the Inheritance Tax in New Jersey?

By inheritance tax, Tax

What is the Inheritance Tax in New Jersey?

 

Well, just like Pennsylvania, it depends on the nature of the relationship between the person who died and the person who’s receiving the money. 

Actually, New Jersey now has lower inheritance taxes for most people. It didn’t for years, but they changed that about four or five years ago. 

For most close relatives, your spouse, your children, your grandchildren, grandparents, there’s no inheritance tax in New Jersey. 

You get a little bit outside that you go with siblings or spouses of your children, then the first 25,000 dollars is exempt, and then the tax rate is 11% on the $1,075,000, then the next $300,000 is 13% and the next $300,000 is 14 % and then over $1,700,000 it’s 16 %.

Jan 26
Love1

What is the Annual Gift Tax Exclusion Amount?

By Gift Tax, Tax, Taxes

What is the Annual Gift Tax Exclusion Amount?

 

What is the annual gift tax exclusion amount in 2022? The amount is $16,000 per person, and in 2023 it’ll be $17,000 per person. 

What does that mean? It means that you can give up to $16,000 to as many people as you want, and it will not affect your future estate taxes, and you don’t have to file a gift tax return. It’s not taxable to you. 

And gifts to recipients are never taxable to them, so anytime you make a gift to the recipient, they know don’t ever pay income tax on that. Something a lot of people don’t understand. 

If you make a gift above $16,000, it doesn’t mean that’s taxable either. It just means that you should file a gift tax return. And if you do that, what will happen is it will reduce your lifetime amount, your exemption amount, lifetime exemption amount now is over $12 million per person. So most people can afford to make those gifts without having a big taxable estate at the end of their lives.