How to Take Advantage of Annual Exclusion

It is important to learn about taxes if you want to own property. Property is subject taxation at the same rate at purchase and at death. Gifts of property are not subject to taxes if the value is $10,000 or less. Joint gifts of property bring the annual allowance up to $20,000 per gift. Read on to learn how to take advantage of annual exclusion.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Assets
• Financial adviser
• Beneficiaries

1. Start your gift program as soon as possible to maximize the number of annual exclusions.
2. Consult a financial adviser before you give out annual gifts to your beneficiaries. Annual exclusions can generate tax burdens if not distributed properly.
3. Generate gifts with your spouse. The dollar amount of annual exclusions doubles when a spouse becomes a giver.
4. Create gifts with recapitalization of your corporation. Wealth tied up in corporations is lost money.
5. Learn about the Crummey Rules in regards to future interests. Many future interests do not qualify for annual exclusion.
6. Make annual gifts to grandchildren. These gifts may help you avoid generation-skipping taxes.
7. Purchase nonvoting stock to meet the annual exclusion allowed for gifts.

Tips & Warnings

• There is no limit to the number of gifts given in one year.
• Recapitalization of your corporation will free tied up wealth.
• The $10,000 annual exclusion is not available when the spouse is not a United States citizen.