financial question...if you were to give money away

I think you can gift your children like 9999.99 a year with out any tax implications.

http://turbotax.intuit.com/tax-tools/tax-tips/tax-planning-and-checklis…

The gift tax is perhaps the most misunderstood of all taxes. When it comes into play, this tax is owed by the giver of the gift, not the recipient. You probably have never paid it and probably will never have to. The law completely ignores gifts of up to $13,000 per person, per year, that you give to any number of individuals. (You and your spouse together can give up to $26,000 per person, per year to any number of individuals.)

If you have 1,000 friends on whom you wish to bestow $13,000 each, you can give away $13 million a year without even having to fill out a federal gift-tax form. That $13 million would be out of your estate for good. But if you made the $13 million in bequests via your will, the money would be part of your taxable estate and would trigger an enormous tax bill.

Correct - The gift tax comes from the Giver. There is an Annual Exclusion which as of right now is $13,000. Which is as stated earlier where you can give a person $13,000 annually per person per year. If you go over that amount, you then trigger a "Gift Return" which tracks your gifting. Any amount over the annual gift amount goes against your lifetime exclusion amount.

At the end of our life you have a Life Time Gift exclusion. IN the past the amount was $1M. So if your estate is worth less than $1M, than it falls within the exclusion amount and zero taxes are paid as a "Death Tax." As your estate goes over this amount, than it's like 50/50, half goes to Uncle Sam, half goes to your heirs. So of your estates was worth $5M, the first $1M is excluded, and then with the remaining $4M, $2M goes to your heirs and $2M goes to Uncle Sam. So in total, your heirs receive $3M while Uncle Sam gets $2M.

That's a simplified explanation of things. Of course this can vary each year depending on what the lawmakers do. For example, under the Bush Tax Cuts the exemption amount has climbed to $3.5M and this year in 2010 there is no death tax. So if you have a rich grandma you really want her to die before the end of the year because the "Death Tax" is repealed for 2010.

More info can be found here:
http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States

When someone comes to me asking about their taxes they owe on some money they "inherited" I am excited to say: "It's your lucky day. You don't owe any taxes on that money. They've already been paid."

Death tax is the biggest rip-off in the history of any taxes. It costs American's BILLIONS a year in life insurance and lost inheritance!

This tax is a tax on money that has already been taxed...so basically, that money has been taxed at around 85%....... fucking ridiculous!

I'm gonna give all my money in savings to Team Suzuki so they can pay Ryan Dungey and put diesel fuel in their transporter.

Thats why you are supposed to spend everything before you die.

I thought there were lifetime maximums?

I agree with you

But their logic is this:

It is income to YOU, the recipient of the inheritance. That is in fact, true. It is new income to you.


So, while I AGREE WITH YOU, I also understand the philosophy behind it.
I also think the rates taxed are more outrageous than the concept of the tax itself

It's not treated as income to the recipient, Dave. It's a tax on the estate paid by the estate. The logic is . . . well . . . hmmm . . .

True

But, I still see it as same, as they're still taking from the recipient



Either way, I still think it's crap and I think the rates are outrageous

Steinbrenner picked a great year to die, thats for sure.. Saved his kids around 500 million in taxes.. Ridiculous!

Keep an eye out for a lot of plug pulling towards the end of the year. Don't take trips to the desert with your son in law gramma.

yes when you give 10% of your income to the mormans you wont have to pay income tax on it.....