There is no gift tax in Florida, but the federal government imposes one. However, you may need to simply report a gift to someone in a given year worth over $ 15,000. In most cases, you will not pay tax on donations unless you excuse your exemption from lifetime gifts and estates. The law on tax cuts and jobs has recently raised this threshold significantly.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "We will explain in detail how the tax on donations works , as well as legal ways to avoid them or minimize the impact, we can also help you find a financial advisor to assist you in all areas related to estate planning and tax matters. "data-reactid =" 32 "> We will explain in detail the operation of the gift tax, as well as ways to avoid it legally or to minimize the negative consequences. find a financial advisor to assist you in all areas related to estate planning and taxation.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Repeal of the gift tax in Florida"data-reactid =" 34 ">Repeal of the gift tax in Florida

While the federal government imposes a tax on donations, some states also levy their own taxes. Florida, however, repealed its own tax on donations in 2004. But before taking a big breath of air from Florida, let's explore the federal tax on donations.

We will start by defining what exactly is a gift. The IRS fundamentally defines a gift as any transfer of money, assets, or property to someone else without expecting to receive something of equal value. or higher in return. This is based on the fair market value of this transfer. For cash gifts, it's pretty simple. When you buy a house or vehicle to a person, however, the value depends on a reasonable price that someone would be willing to pay if it had no obligation to do so.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Exemptions from the federal gift tax"data-reactid =" 37 ">Exemptions from the federal gift tax

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Fortunately, everyone benefits from an annual tax exclusion This is the amount you can transfer to an individual without attracting the attention of Uncle Sam. Trump tax plan increased this amount to $ 15,000 for 2018 and 2019. This applies per person, per year. You can give your son, daughter and nephew $ 15,000 each in 2018 and 2019 without worrying about donation taxes. "Data-reactid =" 38 "> Fortunately, everyone benefits from an annual tax exclusion for donations – can transfer to anyone without attracting Uncle Sam's attention. Trump tax plan increased this amount to $ 15,000 for 2018 and 2019. This applies per person, per year. So you can make a $ 15,000 gift to your son, daughter and nephew in 2018 and 2019 without worrying about gift taxes.

But even if you go over that limit for a particular person, that does not mean you have to pay a gift tax with money from your own pocket. However, you must declare the donation on IRS Form 709: the US tax return for donations (and the generation-to-generation transfer).

The IRS requires that it keeps track of how you use your lifetime tax exemption and for lifelong donations. The Jobs and Tax Reduction Act increased the cumulative exemption to $ 11.18 million in 2018 and $ 11.40 million in 2019. Thanks to the advice of a qualified financial advisor, a couple married can give up to $ 22 million without paying tax on donations.

But once you start offering gifts worth over $ 15,000 a year to an individual, you start nibbling this lifetime exemption.

We will explain this in detail.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "How does the tax exemption for life and on donations and estates work?"data-reactid =" 43 ">How does the tax exemption for life and on donations and estates work?

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Remember, the annual report donation tax the exclusion for 2018 and 2019 raises to $ 15,000. Do not hesitate to transfer gifts of a value equivalent to this number to any number of people, each without regard to taxes. "Data-reactid =" 44 "> Do not forget, the annual report donation tax the exclusion for 2018 and 2019 raises to $ 15,000. So do not hesitate to transfer gifts of an equivalent value to an unlimited number of individuals, without worrying about taxes.

But if you go over that threshold for a particular person, you start reducing your lifetime gift and estate tax exemption by about $ 11.18 million.

Think of the annual exclusion and the lifetime exemption as buckets of water. If you fill in one (annual exclusion), it moves on to the next (lifetime exemption). Once you fill it up, that's when Uncle Sam comes in.

The IRS can collect a federal gift tax on what is pouring out of its bucket of lifetime exclusion or on the amount exceeding $ 11.18 million in 2018 (about $ 11.40 million for 2019). The tax rate of donations can reach 40%, depending on the amount of your money that exceeds your lifetime exemption.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Florida succession law"data-reactid =" 48 ">Florida succession law

As for the IRS, you offer gifts if you die and leave your estate to your heirs. This is why we are talking about tax exemption for donations and estates. When you start reducing your lifetime exemption when you are alive by offering taxable gifts, you have less estate to leave tax-free.

In hypothetical terms, you would have $ 11.40 million from your estate (total value of all your assets at death) to bequeath to your loved ones tax-free if you never reduce your lifetime exemption and if you die in 2019.

But if you transfer an estate that is worth more than the death, the federal government can tax a portion of the estate that you leave before it is transferred to the designated heirs. As stated above, the federal inheritance tax rate can reach 40% depending on the size of your taxable estate.

The story continues

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Fortunately, there is no Real estate tax in Florida. In addition, the state does not apply inheritance tax, which usually prevents your heirs from being taxed on what you leave them with. In addition, you can take several steps to reduce your estate in life in order to protect from the federal government what you leave to your loved ones. "Data-reactid =" 56 "> Fortunately, there is no Real estate tax in Florida. In addition, the state does not apply inheritance tax, which usually prevents your heirs from being taxed on what you leave them with. In addition, there are several things you can do to reduce your estate in order to protect what you leave to your loved ones at the hands of the federal government.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Reduce the size of your estate"data-reactid =" 57 ">Reduce the size of your estate

As you can see, the value of your estate must exceed a significant amount on your death so that Uncle Sam can accept a cut. But even wealthy families have certain options to protect their areas from taxes.

One of the solutions is to reduce the size of your estate when you are alive. Do not forget that you can donate up to $ 15,000 in 2018 and 2019 to as many people as you want without even having to declare them. In addition, this annual exclusion generally increases each year to keep pace with inflation.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "You can also take advantage of trust funds. There are several types, but we will explain the basics of irrevocable trusts. You establish one with the help of a lawyer. As a creator of trust, you can designate your beneficiaries. The assets that you transfer to the trust are no longer your property with respect to the IRS. Thus, they effectively reduce your estate. When you die, the assets and any income they generate are transferred to the appropriate heirs. "Data-reactid =" 80 "> You can also take advantage of trust funds. There are several types, but we will explain the basics of irrevocable trusts. You establish one with the help of a lawyer. As a creator of trust, you can designate your beneficiaries. The assets that you transfer to the trust are no longer your property with respect to the IRS. Thus, they effectively reduce your estate. When you die, the assets and income they generate are transferred to the appropriate heirs.

You can build trust with virtually anything of value, including:

  • Savings accounts
  • Pension plans
  • Certificates of Deposit (CD)
  • Investment portfolios
  • stocks
  • Obligations

But in any case, some gifts you will make will never be taxed.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "What does not count in the gift tax?"data-reactid =" 90 ">What does not count in the gift tax?

When you transfer money or property to specific people or entities, the IRS does not consider the move as a taxable event, regardless of the amount. In other words, these changes do not reduce your lifetime exemption. We will explain a few below.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Husband: You can give your husband or wife as much as you want and the government can not impose it as long as your wife is a US citizen. However, you can donate up to $ 152,000 to a non-citizen spouse in 2018 and $ 155,000 in 2019 without triggering a gift tax. "Data-reactid =" 92 ">Husband: You can give your husband or wife as much as you want and the government can not impose it as long as your wife is a US citizen. However, you can donate up to $ 152,000 to a non-citizen spouse in 2018 and $ 155,000 in 2019 without triggering a gift tax.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Charities: Uncle Sam relaxes the strings a bit if you send gifts to help those in need. You can give any amount to certain registered non-profit organizations without paying tax on donations. In fact, you could even receive charitable tax deductions. The definition of a non-profit organization can be hard to reach under the eyes of the IRS, however. It is best to use a tax advisor or financial advisor when considering the possibility of making a large donation. "Data-reactid =" 93 ">Charities: Uncle Sam relaxes the strings a bit if you send gifts to help those in need. You can give any amount to certain registered non-profit organizations without paying tax on donations. In fact, you could even receive charitable tax deductions. The definition of a non-profit organization can be hard to reach under the eyes of the IRS, however. It is best to seek the advice of a tax expert or financial advisor when considering the possibility of making a large donation.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Medical fees: If you send money directly to a medical facility to cover the eligible medical expenses of another person, it is not a taxable event. Nevertheless, you should look for a tax expert to know the details of what counts as an eligible medical expense. "Data-reactid =" 94 ">Medical fees: If you send money directly to a medical facility to cover the eligible medical expenses of another person, it is not a taxable event. Nevertheless, you should call a tax professional for details of what constitutes an eligible medical expense.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Tuition fees: If you send money to an educational institution to cover tuition, the government will not tax it, regardless of the amount. However, you must send it directly to the school. If you send it to the student, the IRS considers that it is an ordinary taxable donation depending on the amount. Yet, the IRS allows an exemption for 529 education savings plans"data-reactid =" 95 ">Tuition fees: If you send money to an educational institution to cover tuition, the government will not tax it, regardless of the amount. However, you must send it directly to the school. If you send it to the student, the IRS considers that it is an ordinary taxable donation depending on the amount. Yet, the IRS allows an exemption for 529 education savings plans.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Exemption from tax on donations and 529 plans"data-reactid =" 96 ">Exemption from tax on donations and 529 plans

<p class = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If you invest in a Plan 529 to a beneficiary such as your son or daughter, you technically make gifts. However, the IRS allows you to contribute up to $ 75,000 without reducing your annual exclusion, provided you agree to no longer make contributions for a 529 plan for the same beneficiary within the next five years. years. "Data-reactid =" 97 "> If you invest in a Plan 529 to a beneficiary such as your son or daughter, you technically make gifts. However, the IRS allows you to contribute up to $ 75,000 without reducing your annual exclusion as long as you agree to no longer make contributions for a 529 plan for the same beneficiary over the next five years.

Essentially, the IRS allows you to use five years of annual exclusions for this beneficiary at a time, as it is a 529 plan. The advantage is that the move would not eat away your $ 11.40 million lifetime exemption, regardless of the amount, at any given time. If you simply gave $ 75,000 to the beneficiary, you would reduce your lifetime exemption because you were giving an individual more than $ 15,000 in one year.

But what if your son or daughter is in college and you do not have an active 529 plan in their name? You can always send money directly to the school to cover tuition. In addition, you can send up to $ 15,000 directly to each student to cover other education expenses. No movement requires you to report it to the IRS. And neither one nor the other reduces your lifetime exemption.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "What should I know about the gift tax?"data-reactid =" 100 ">What should I know about the gift tax?

The law on tax cuts and employment has resulted in one of the largest revisions to the tax code since the 1980s. The tax exemption on gifts for life and inheritance, for example, has increased significantly. However, the new rate and other provisions are expected to expire in 2025. If Congress takes no action to make these tax cuts permanent, the rate would likely return to its level of before 2017, which was due to 39, about 5.49 million dollars.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Take-away"data-reactid =" 102 ">Take-away

Although Florida no longer applies its own tax on donations, you can still be liable for a federal tax on donations. However, the IRS allows you to give up to $ 15,000 in 2018 and 2019 to anyone without attracting agency attention. If you exceed this limit, you may need to simply report it under the IRS 709 form. However, you will start to gnaw on your lifetime gift and your estate tax exemption of approximately $ 11.40 million. of dollars. You must pay a tax on gifts to be paid only after exceeding this threshold. But keep in mind that this new level is temporary at the time of writing these lines. Less than any congressional action, it is expected to expire in 2026 and could return to its pre-2017 level, which was about $ 5.49 million.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Tips to protect your estate from taxes "data-reactid =" 124 ">Tips to protect your estate from taxes

  • If you are rich, the federal government can take a large part of your estate upon your death. And while planning your last days is not an easy task, it's always helpful to hire a professional to guide you through the complex process of estate planning Be sure to leave behind as much as possible for your loved ones.
  • We can help you find a financial advisor who can help protect your estate and manage every aspect of your financial life. Use our SmartAsset Financial Advisor Matching Toolwhich connects you to up to three advisors in your area. It also gives you access to their profiles, which list their specialties and qualifications.
  • You can also consult our in-depth study on the Top 10 Financial Consulting Firms in Florida to begin.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Photo credit: © iStock.com / imagedepotpro, © iStock.com / poladamonte, © iStock.com / Tempura"photo-reactid =" 129 "> Photo credit: © iStock.com / imagedepotpro, © iStock.com / Poladamonte, © iStock.com / Tempura

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