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Estate and Gift Taxes

Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death. The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them.
Gift Tax applies to the transfer by gift of any property (including money) by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.

Frequently Asked Questions (FAQ)

  • Q. When is filing required for Estate Tax?

    A. Filing is required when combined gross assets and prior taxable gifts exceeds the filing threshold for instance $5,430,000 in 2015, and $5,450,000 in 2016.

  • Q. When is filing required for Gift Tax?

    A. filing is required by the donee (tax payer) if the gift annually exceeds the threshold for instance $14,000 for years 2014, 2015 and 2016. If tax payer and spouse give property together then gift tax filing is required if gift annually exceeds the threshold for instance $28,000 for years 2014, 2015 and 2016.

  • Q. Who pays the Gift Tax?

    A. The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead.

  • Q. May I deduct gifts on my income tax return?

    A. Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions).

  • Q. Is gift to spouse taxable?

    A. Gift to spouse is excluded from taxes.

  • Q. How to determine value of my gift?

    A. The value of the gift is determined by Fair Market Value. The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent's gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.

  • Q. Is Tuition expense considered as a gift?

    A. No, Tuition expense is excluded from gifts.

  • Q. Is Medical expense paid for someone considered a gift?

    A. No. Medical expenses you pay for someone is excluded from gift.

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