Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Gift Tax/Kiplinger Article
Old 12-04-2022, 06:55 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 7,329
Gift Tax/Kiplinger Article

Thought I'd run this by our esteemed group here in case I'm missing something.

This month's Kiplinger's has an article on "Smooth Year End Money Moves", highlighting "Trim your tax bill".

It lists things such as being aware of surprise cap gains from MFs, identify your deductible expenses, contributing to a 529 etc but also says "Make Gifts".

I must be missing something--I often am. My take is that unless a couple has plans for over $24.12 million to give away, there is no direct tax savings by making gifts.

Yes, I'm aware of the intricacies of the $16K/$32K reporting issue and the chance the Congress might drop the $12MM/$24MM exclusion to $6MM, but unless one is in that range, how does making a gift now save anything on taxes today? Even with much lower levels at the state level, doesn't all of that only become an issue at estate time?

Or am I missing something?
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-04-2022, 07:13 AM   #2
Moderator
braumeister's Avatar
 
Join Date: Feb 2010
Location: Flyover country
Posts: 22,588
Quote:
Originally Posted by marko View Post
also says "Make Gifts".
What does the article say about that?
__________________
I thought growing old would take longer.
braumeister is offline   Reply With Quote
Old 12-04-2022, 07:18 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2014
Posts: 6,173
Is it possible they meant charitable gifts or is that discussed separately? Heck, I get enough e-mail and snail mail from every place I've ever donated this time of year to remind me to "make gifts".
athena53 is offline   Reply With Quote
Old 12-04-2022, 07:29 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 7,329
Quote:
Originally Posted by braumeister View Post
What does the article say about that?
It just goes into the details of how much you can give away before needing to file a gift Tax return, what the exclusion is and how Congress might lower that exclusion, how State gift taxes are different, etc. It also lists the obvious, like charitable giving and covering a dependent's medical/college tuition costs.

"...in order for he the gift to count towards the 2022 exemption you must give away the money before December 31..."

Ok, but few are in the $24MM range for that to be a concern and States with lower exemptions have different rules anyway. Again, isn't all of that more of a concern at estate time?
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is online now   Reply With Quote
Old 12-04-2022, 08:40 AM   #5
Recycles dryer sheets
TripleLindy's Avatar
 
Join Date: Aug 2022
Posts: 274
We helped our kids buy houses over the past 2 years and had to file gift tax forms. Even with 6 figure gifts, there was no impact on taxes, positive or negative. As an aside, the gift tax form has to be one of the most complicated forms to file. Itís absolutely insane.
__________________
Retired at 55 in 2017
TripleLindy is offline   Reply With Quote
Old 12-04-2022, 08:45 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 7,329
Quote:
Originally Posted by TripleLindy View Post
We helped our kids buy houses over the past 2 years and had to file gift tax forms. Even with 6 figure gifts, there was no impact on taxes, positive or negative.
That has been my understanding. I'd expect those who would be impacted (over $24MM in giving) don't rely upon Kiplinger's for tax advice.
marko is online now   Reply With Quote
Old 12-04-2022, 08:50 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Car-Guy's Avatar
 
Join Date: Aug 2013
Location: Back in the Dog House
Posts: 8,506
Quote:
Originally Posted by TripleLindy View Post
We helped our kids buy houses over the past 2 years and had to file gift tax forms. Even with 6 figure gifts, there was no impact on taxes, positive or negative. As an aside, the gift tax form has to be one of the most complicated forms to file. It’s absolutely insane.
+1 Did the same thing. Bought the DD a new house and paid for it in cash last year. Had to file the "stupid" paper work but it's was so intimidating/complicated that I took some liberties and made it simple and only filled out what I thought was relevant. So far, no questions have been asked.

IMO, form 709 was designed/intended for really rich folks and not us lowly multi-millionaires.
__________________
I don't know how to act my age since I've never been this old before.
Car-Guy is offline   Reply With Quote
Old 12-04-2022, 09:27 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,886
I don't see this trimming your income tax bill at all so perhaps it is just mischaracterized, but here is the clip that marko is referring to:
Attached Images
File Type: jpg Capture.JPG (87.5 KB, 34 views)
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 12-04-2022, 09:39 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 33,893
Isn’t it just reminding people that if they have gifts to make to anyone, here is how much you can give this year without filing a gift tax return?

No, not tax saving this year, just paperwork and record keeping savings, and it might help save taxes in the long run because those annual gifts up to the exemption aren’t counted against your estate at all.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 12-04-2022, 10:33 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 14,823
If you live in a State that taxes inheritances of $1 Million , giving away some $$ now will/could save taxes for many folks, especially as their house probably counts in the estate valuation.

Only other way I can see it saving taxes is, If I give away $32K per year, then that money doesn't earn me interest/dividends the next year, of ~ $1,600 so taxes saved might be ~$352 at the 22% marginal tax rate for every gift.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is online now   Reply With Quote
Old 12-04-2022, 10:55 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,886
^^^^ If you give away all your money then you would have no interest or dividend income and your tax bill would be much, much lower.

If there are forum members interested in this tax-saving tactic, PM me and I'll be happy to help.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 12-04-2022, 11:23 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 7,329
Quote:
Originally Posted by audreyh1 View Post
Isnít it just reminding people that if they have gifts to make to anyone, here is how much you can give this year without filing a gift tax return?

No, not tax saving this year, just paperwork and record keeping savings, and it might help save taxes in the long run because those annual gifts up to the exemption arenít counted against your estate at all.
Agreed. But the article was about prepping for tax season, so I think it was a misplaced strategy
marko is online now   Reply With Quote
Old 12-04-2022, 11:51 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 7,329
Quote:
Originally Posted by Sunset View Post
If you live in a State that taxes inheritances of $1 Million , giving away some $$ now will/could save taxes for many folks, especially as their house probably counts in the estate valuation.
But that would be at one's death.

My grandfather was very, very wealthy, but "gift" was a four letter word to him.

The idea of giving his money away in order to save us taxes was a concept so out of his reasoning that it was never even considered a subject to broach.
"You'll get my money when I’m dead! Not a minute before!" was implied but never spoken.

It has been so ingrained in our family that that mentality has transferred down to me for better or worse.
marko is online now   Reply With Quote
Old 12-04-2022, 12:20 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Car-Guy's Avatar
 
Join Date: Aug 2013
Location: Back in the Dog House
Posts: 8,506
^^^^^
That was my dads perspective too but the logic didn't transfer very well to me... I often wonder if my gifting has maybe been to big of a crutch for my DD.
__________________
I don't know how to act my age since I've never been this old before.
Car-Guy is offline   Reply With Quote
Old 12-04-2022, 01:16 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 33,893
Quote:
Originally Posted by marko View Post
Agreed. But the article was about prepping for tax season, so I think it was a misplaced strategy
Perhaps, but I think it is typically included as a reminder in articles discussing end of year tax planning simply because there is a deadline.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Gift Tax/Kiplinger Article
Old 12-05-2022, 10:45 AM   #16
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 4,951
Gift Tax/Kiplinger Article

Here in PA there is a inheritance tax on everything over about $3,000, so we are gifting some each year. If our estate continues to grow we may also be affected by the upcoming 2026 reversion of the estate tax law, though at the moment itís not an issue.
Dash man is online now   Reply With Quote
Old 12-05-2022, 02:17 PM   #17
Dryer sheet aficionado
Piper20's Avatar
 
Join Date: Mar 2021
Posts: 49
There is no gift tax in PA. There is an inheritance tax.
Piper20 is offline   Reply With Quote
Old 12-05-2022, 02:25 PM   #18
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 4,951
Quote:
Originally Posted by Piper20 View Post
There is no gift tax in PA. There is an inheritance tax.

Thanks, I know that and have no idea why I typed ďgift.Ē
Dash man is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Kiplinger Article on Encore Careers Tekward Life after FIRE 2 07-02-2021 07:22 PM
Article: Evaluating lump-sum payout (Kiplinger) steelyman FIRE and Money 1 05-23-2019 03:17 PM
Kiplinger article about SS lump payments. MaddMaxx FIRE and Money 1 01-24-2014 01:45 PM
Kiplinger's:How to Make Your Money Last FOREVER! Billy Life after FIRE 24 10-13-2006 10:32 AM

» Quick Links

 
All times are GMT -6. The time now is 11:48 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.