Do you spend hours trying to find the perfect gift for each person on your holiday list? Instead of buying your loved ones sweaters or gadgets this holiday season, what are the benefits of giving a financial gift?
Both President-Elect Donald Trump and the Republicans have called for a repeal of Federal estate taxes, and with the Republican clean sweep in Washington, all eyes are on potential legislation to eliminate the estate and gift tax in 2017. Tax reform is one of the central components of Donald Trump’s platform. A new administration will bring a shift in priorities and likely renewed efforts for tax reform. In many respects his goals for tax reform are aligned with those described in the Tax Reform Task Force report issued by the House Republicans. The House Republicans’ Plan removes the estate and generation-skipping transfer tax but is silent about the gift tax.
While tax lawyers and professionals will be able to make use of some of their tried and true tax strategies when advising tax clients during the upcoming tax season, they will need to ready themselves for tax changes under the incoming Trump administration and Congress. Join hundreds of professionals at the 41st Annual Tax Law Conference in Washington, D.C. on March 3 to network and learn about the biggest tax law changes planned for 2017. Register online at www.fedbar.org/taxlaw17.
Giving a small amount of money each year is a common estate planning tool, but gifts from one person to another are capped by the IRS at $14,000 (twice that for a married couple giving together) a year. Anything above that needs to be reported by the giver on their taxes and is subject to gift and estate taxes.
Under current law an individual can leave up to $5.45 million to heirs without paying a federal gift or estate tax. Above that threshold, the tax is assessed at a 40 percent rate. Married couples can shield estates worth as much as $10.9 million from the 2016 tax year. Trump’s proposal would replace the estate tax with a capital gains tax on the appreciation of inherited assets of more than $10 million, subject to some exemptions for small businesses and family farms.
In addition to the $5.45 million exemption, many other gifts are not subject to the gift tax—for example, gifts to a spouse. Estate and gift tax planning can be a complicated and overwhelming process. Federal and state tax laws are multifaceted, with different exceptions and exemptions available. Sign up now for the 2017 Tax Law Conference to take advantaged of early bird discount rates and get the latest information and tools regarding tax law at www.fedbar.org/taxlaw17.
Stacy Slotnick, Esq. holds a J.D., cum laude, from Touro Law Center and a B.A., summa cum laude, from the University of Massachusetts Amherst. She performs a broad range of duties as an entertainment lawyer, including drafting and negotiating contracts; addressing and litigating trademark, copyright, patent, and other IP issues; and directing the strategy and implementation of public relations, blogging, and social media campaigns.