[Vision2020] House Passes Bill Linking Tax Cuts, Minimum Wage

[Scott Dredge]

I'm not wrong about this Pat.  Donors do not receive a deduction on $11,000 gifts to individuals.  The recipients receive this money tax free.  It doesn't matter whether you mark it as a "gift" or not when you're giving it to another individual.

From Motley Fool: http://www.fool.com/school/taxes/1998/taxes980521.htm

Many people are curious about the "gift tax exclusion" and how it really works. Some still believe that a gift is deductible by the person making the gift (the donor), and taxable to the person receiving the gift (the donee). This is absolutely not true. Gifts (not to be confused with charitable contributions, which have their own separate rules) are neither deductible by the donor, nor taxable to the donee.


From: http://www.taxguru.org/estate/706.htm

A big misconception people have is that gifts will reduce their taxable income.  Not true.  Gifts are not deductible on the donor's 1040.  The trade-off is that gifts are not considered to be taxable income to the recipients.

-Scott

----- Original Message ----
From: Pat Kraut <pkraut at moscow.com>
To: vision2020 <vision2020 at moscow.com>
Sent: Wednesday, February 21, 2007 9:49:11 PM
Subject: Re: [Vision2020] House Passes Bill Linking Tax Cuts, Minimum Wage



 
DIV {
MARGIN:0px;}



I believe you are wrong about this but I will call 
Clark Howard on the radio and find out for sure. In listening to him and others 
you can give 11 thou to someone mark it clearly as a 'gift' and you do not pay 
taxes on it. I have heard Bob Brinker say the same thing but I will call or 
email them and find out for sure. 

 

 


  ----- Original Message ----- 

  From: 
  Scott Dredge 
  

  To: viz 

  Sent: Wednesday, February 21, 2007 1:50 
  PM

  Subject: Re: [Vision2020] House Passes 
  Bill Linking Tax Cuts, Minimum Wage

  


  
  --- 
  Donovan Arnold wrote ---  
  
  > Many people donate money to family members so that don't 
  have
> to pay as high of taxes.  For example, if you make $100,000, 
  give
> $10K away to three children over age 18, that puts you in the 
  70K
> bracket instead. Why do that? If you are single and make 
  over $100K
> the government takes more than if you make $70K, like most 
  of everything
> between $70-100K goes to the government, about 95% of 
  that. I know
> other family members give away wealth while they are 
  living in order to
> avoid the 50% estate tax their relatives would have 
  to pay if they got it after they died.

I don't believe any of this is 
  correct Donovan.  You can give anyone $10k per year  (or maybe it's 
  a little more nowadays like $11k although I would need to look this up) and 
  they would not be required to pay taxes on that money.  You would not be 
  allowed to deduct this from your income, so you would still pay income tax on 
  this money.

The 2006 tax rate for a single filer for income earned 
  above $75k is taxed at a rate of 28% (federal).  How do you get 95% going 
  to the government?

As far as estate taxes go, in 2006 I believe the 
  first $2,000,000 of an estate passing to a non-spouse is exempt from federal 
  taxes.  I'm not up on the latest laws in estate planning, but a good 
  estate planner would know all the exemptions and recommended stategies of 
  breaking down your estate to take advantage of estate tax 
  laws.

-Scott


   






  
  


  
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