Wisconsinites are smelling roses, Go Bucky!
As we head into the last month of 2010 the future of the estate tax is still in flux and now’s the time to take full advantage of your annual gift-tax exclusion — because once the year is over, 33 days and counting, your 2010 exclusion is gone forever.
Before you get on your computer and start shopping this Cyber Monday, consider taking advantage of your 2010 annual exclusion, although you don’t get an income-tax deduction for such gifts, there’s an important advantage:
Assets given away during your life — and any future appreciation — won’t be included in your estate to be taxed after you die. And while there is no estate tax in effect for 2010 — Congress allowed it to lapse for one year — it may come roaring back in 2011. So relinquishing those assets from your estate and prove to be a huge advantage.
Keep track of your gifting and file a gift-tax return — Form 709 — for any gift to an individual that exceeds the annual gift exclusion, which is $13,000 in 2010. You can give $13,000 each to any number of individuals without worrying about the gift tax. You and your spouse can give up to $26,000 of either one of your assets per person, as long as the spouse agrees not to give the person another dime during the year.
If you don’t use your $13,000 annual exclusion by December 31, you lose it forever. Each new year presents you with a new exclusion, but you can’t reach back to benefit from a previous year’s unused allowance. Next year, the gift-tax exclusion will remain at $13,000.
If you are looking for an immediate deduction as opposed to relinquishing assets from your estate, look at things like charitable gifting. Two local foundations that stick out in my head as a good place to donate tax-deductible contributions are:
Overture Center for the Arts – http://prd.overturecenter.com/contribute/annual-giving
Madison Community Foundation – http://www.madisoncommunityfoundation.org/Page.aspx?pid=192
If you have a foundation that you make tax-deductable contributions to, please post a comment and leave the web address if you wish.
In addition to making current contributions, one longer term strategy that could also present you with deductions are Charitable Remainder Trusts. For more information on this, please read our August 19th post: https://statebankofcrossplains.wordpress.com/2010/08/