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If you live in Minnesota, Wisconsin, and N. Dakota states and have a question, ask an accountant. |
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Tips and Info. |
Tips — Personal TaxesFamily Giving Before the end of the year, take advantage of what is known as the annual gift-tax exclusion. This allows you to give up to $12,000 a year to each of any number of recipients. It allows $24,000 a year to each recipient if your spouse joins in the gift. The exclusion is an annual one - use it or lose it! Transferring assets to your children or to parents you're supporting may result in an income tax savings if the recipients are in a lower tax bracket than you. How? Assuming the gift was earning interest, the interest will now be taxed at the receiver's rate and will be paid by the receiver. More about this interest income: In the case of children 18 or older, their income will only be taxed at their own rate, otherwise the Kiddie Tax applies. What is the Kiddie Tax? This means the applicable tax rate is the same as the parent's rate if certain income limits are met, regardless of who the giver is! Transferring assets to family members is a way of building an education fund for children. Bonus: The gifts you make reduce your estate and, as a consequence, the estate tax ultimately levied will be less. Keep your annual gifts under $12,000 (or $24,000 jointly with your spouse) and you'll also save gift tax. |
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Other Personal Tax Tips |
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