Prosperity Game ~ May 22, 2009
Posted in Prosperity GameIn our search to find ways to spend our increasing abundance, this bit came across my desktop today. I just googled $22,000 gifts, and this came up. I’d made a decision that the gift would go to our oldest boy Jacob, and that I’d do the same for each of the other kids. But this info just caught my attention as a valuable piece of financial thinking, which I rarely do much of. Part of this Prosperity Game is about pushing my own boundaries as far as what I will use abundance for. And having been a successful musician, I still haven’t learned much about spending 6 figure incomes effectively. That was a joke about being broke. Hehehe. That part of my life is OVER.
This is an excerpt from a recent article written about gift splitting between spouses to help offset Taxable Income. How about that? I would never have known such a thing even existed without looking for ways to spend $22,000. Click on the title in blue below, to read the entire article.
Steve
Married Couples: Consider Gift Splitting
By: Gregory J. Cook, EA, CPA
Although the holidays are long forgotten, you may still want to consider giving gifts this year. A well-planned program of gifts to loved ones can preserve more of your wealth for your family by reducing the size of your taxable estate. How can giving away assets preserve your wealth?
Any estate that’s worth over $1 million in 2002 could owe federal estate taxes. While that $1 million amount is scheduled to rise to $3.5 million by 2009, and the federal estate tax itself is scheduled to be repealed in 2010, estate taxes can still be a significant threat to larger estates for years to come.
Give Now, Save Later
Giving away assets during your lifetime is one way to fight back. Each year, a special provision in the tax law called the gift-tax annual exclusion allows you to give away a certain amount of assets, free from gift taxes, to your children or other heirs. The tax-free limit is currently $11,000 per recipient. If you are married and you and your spouse agree to split a gift, the excludable amount doubles to $22,000. Employing a strategy of lifetime giving may enable you to drastically reduce the size of your taxable estate.
For example, suppose you give $11,000 to each of your two children and three grandchildren. Over a five-year period, you can transfer $275,000 tax free. If your spouse joins in your gifts, your tax-free gift total doubles to $550,000. This technique allows you to reduce the assets included in your estate for estate-tax purposes by over half a million dollars. For example, suppose you give $10,000 to each of your two children and three grandchildren. Over a five-year period, you can transfer $250,000 tax free. In addition, a lifetime exemption of $1 million applies to otherwise taxable gifts you make.
