Knightly Phillips wants to talk to you about a concept called split gifts. It's a tax concept associated with gift taxes, which many people tend to overlook. However, if you're in a high estate tax situation where your family will have to pay estate taxes, it's essential to consider giving away money before you pass away, so it's not taxed. But hold on, the IRS has a different perspective. They say that if you give it away, they will tax it as a gift, and when you die, they will tax it as an estate. The two taxes are unified, meaning that whether you give during your life or at death, you can pass a certain amount without being subject to gift or estate tax. Currently, the threshold is around 5.45 (or whatever the exact figure is this week), and even if you pass more than that, you can do so without paying any taxes. If your goal is to give away part of your estate to avoid future estate taxes, you should take advantage of the annual exclusion limit. The annual exclusion is around $14,000 per individual, and if you and your spouse both want to give, you can each give that amount, effectively doubling it. This is known as a split gift. However, the IRS sees it differently; they consider it as if you both gave the full amount. So, to rectify this, you need to file a gift tax return with the IRS, stating that it was a split gift, with each of you giving $14,000. This way, both of you remain under the annual exclusion limit. It's worth noting that the annual exclusion amount increases each year with the cost of living. Therefore, if your aim is to reduce your estate, it's important to give it...
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709 Instructions 2024 Form: What You Should Know
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