More Tax Tips Sep-Oct 2009

Save Estate Taxes with Year-End Gifts.

If your assets are substantial, making year-end gifts to your children can reduce the value of your taxable estate. Here are some guidelines for a gift-giving program.

  • There are maximum annual amounts which are free from the federal gift tax. For unmarried donors, the upper figure is $13,000 annually. Married donors can make an annual combined gift of up to $26,000.
  • Gifts that exceed the maximum limit, but are made as direct payment for tuition or medical bills, can be tax-free.
  • If you prefer not to make large gifts to younger children, there are several alternatives available, including certain trusts and custodial accounts. Consult with your acccountant to find out which is best for you.

When It Pays To Borrow For Estimated Tax Payments.

If you file estimated tax returns, you may occassionally find yourself short of the cash needed to make a payment and face an IRS penalty for late payment.

Rather than missing a payment, consider borrowing enough to make the payment. The interest you’ll pay on the money you borrow will probably be less than the penalty for not meeting the estimated tax requirement. And some part of the loan interest may be deductible as well.