With 2014 drawing to a close, it’s important to consider your tax situation. The holiday season brings a commendable impulse to give gifts and be charitable, but it’s important to consider the law to make sure your gifts help everyone they are intended to. Consider this a start, but if you have questions or complex situations be sure to consult an attorney for legal advice.
- The annual gift tax exclusion for 2014 is $14,000.00. This means that you can make cumulative gifts to one person of $14,000.00 without any tax consequences.
- Remember, the gift tax exclusion is per recipient. This means that both you and a spouse are eligible to make gifts to a single person.
- Be careful of making gifts to people with special needs. Many government assistance programs are need-based and recipients can be disqualified for having too many assets.
- If you want to set aside assets for a person with special needs, consider funding a trust for their benefit. A properly crafted trust can be used to financially supplement someone’s life without endangering crucial government assistance and benefits.
- Charitable giving can reduce your tax burden and help a worthy cause. When you donate, make certain that you follow IRS guidelines so that your good deed is justly rewarded. Keep records to prove that your donations went where they were supposed.