Friday we discussed the Estate and Gift tax exclusions. Right now both lifetime exclusions are at $5,000,000 until the end of 2012. What happens if you gift the $5,000,000 out of your estate and Congress lets the gift exclusion go back to $1,000,000 in 2013? Well that is the $4,000,000 question. The gift tax exclusion has never gone down from one year to the next, so there is no telling what will happen. Perhaps the $5,000,000 will be grandfathered in (probably) or maybe there will be retroactive gift tax (I doubt it). This is one of the questions that people will be asking in the last few months of 2012, won’t they?
Brian’s Tax Musings
Let’s talk about gift and estate taxes. For all you people with 2-4 million dollars in assets, I am sure you will be glad to know two things:The estate tax exclusion for 2011 and 2012 was raised to $5,000,000 (It was at 3.5 million in 2010, but was slated to go to $1,000,000 this year before last minute tax legislation at the end of 2010).The gift tax exclusion for 2011 and 2012 was also raised to $5,000,000 (It has been at $1,000,000 for some time).The gift tax exclusion (this is the amount every year you can give to anyone with filing gift tax returns or ever paying any gift tax on) for 2011 is $13,000. 2012 will be announced at the end of the year.So for now you can give till it hurts and at least not pay any estate or gift tax.Have a happy Labor Day. I am not blogging Monday and will start up again Tuesday the 6th. I will touch on a gift and estate tax problem (potentially). See you then.
Brian’s Tax Musings
I just read something that I think is interesting. A 1099MISC is supposed to be the amount that will be included in the gross income of the payee. That means if someone pays for your services at the end of the calendar year and you don’t receive the check until the next year, technically the 1099MISC should be the lower amount, even though the payer is going to deduct the higher amount.So if the payer is going to file a 1099MISC for the higher amount, you need to get them to correct it – give them a copy of IRS Reg, Section 1.6041-1 (f) which talks about what should go on a 1099MISC. If the payer will not give you a correction, keep the envelope in which the payment came to you as proof it arrived after the end of the year, put the correct amount on your return and attach an explanation to the return. I can help you with that. Email me at bstonercpa@sbcglobal.net if you want to ask any questions about this.Just remember you will have to include the additional amount in next year’s tax return and hopefully get a 1099MISC from the payee for that year.