Just outside of Cleveland, OH United States
Member #54,077
August 3, 2007
106 Posts
Offline
Quote: Originally posted by rubberbandman on Apr 3, 2008
Gift tax exemptions
There are two levels of exemption from the gift tax. First, transfers of up to (as of 2006) $12,000 per person per year are not subject to the tax. An individual can make gifts up to this amount to as many people as they wish each year. A married couple can pool their individual gift exemptions to make gifts worth up to $24,000 per recipient per year without incurring any gift tax. Second, there is a credit that essentially negates the tax on gifts until a total of $1,000,000 has been given by one person to another.
If an individual or couple makes gifts of more than the limit, gift tax is incurred. The individual or couple has the option of paying the gift taxes that year, or to use some of the "unified credit" that would otherwise reduce the estate tax. In some situations it may be advisable to pay the tax in advance to reduce the size of the estate.
In many instances, however, an estate planning strategy is to give the maximum amount possible to as many people as possible to reduce the size of the estate.
Furthermore, transfers (whether by bequest, gift, or inheritance) in excess of $1 million may be subject to a generation-skipping transfer tax if certain other criteria are met.
You are correct, and that is why I said 9999, because it is LESS than the limit and you will not get taxed, if you want to give someone 12 g's then be my guest, and the exemptions you are talking about only relates to familial and personal problems, not giving money to your best friends.
45 mill is still enough to pay a tax as you said, so if we agree on the subject, why the differences?
Actually in 2007 I believe the tax free exemption increased to $15,000 perperson so you could give you kid $15,000 and your spouse could give your kid $15,000 in the same year without incurring additional taxes. However--speaking with and estate planner--one who works on Performance Based Objectives and NOT just a flat fee--and a good tax lawyer prior to collecting the money from the lottery could have saved this guy and his friends LOTS of money.
Why not just keep your mouth shut and make these friends 2% partners on the jackpot? When you SHARE a jackpot win--you are not REQUIRED to share the jackpot with everyone receiving an equal share--states don't like to advertise this as it increases the amount of work THEY have to do exponentially but most states that allow lottery groups allow you to state how much each person is 'In for' percentage wise. And the loverly thing about this is . . .when their money is gone--it is gone--do not come back with your hand out or you will look like a fool and the answer ill still be NO.
As for the figure $9,999--this was ONCE the government's cash threshhold amount--CASH transactions below this amount did not require extra paperwork--HOWEVER--as most would expect--since 9/11, this, too, has changed. The Feebies have developed bank tracking software that tracks PATTERNS of all transactions automatically so if you keep making cash transactions (unaccounted for by a job) of $3500 or more on a consistent basis--some computer will begin to monitor your accounts and when it reaches ANOTHER threshhold (known only to God and the FB*--and neither is telling), the computer will spit out the account information for review by a human being.
Just outside of Cleveland, OH