Important considerations for end-of-year tax planning
Now that the holidays are here, many people are wondering how to complete their shopping without blowing their budget. Others are considering how to maximize their end-of-year charitable giving so that their tax bills will be manageable come April. With tax planning in mind, it is helpful to talk about the annual gift tax exclusion, as well as the federal estate tax exemption.
The yearly gift tax exclusion refers to the amount that you can give away without incurring a tax penalty. For 2014, the limit is $14,000 for single tax filers and $28,000 for married filers. These amounts are not expected to rise in 2015, but it is always good to know so that you can plan for charitable cash donations during the holiday season. Even if you don’t plan on making a great deal of charitable contributions, knowing that you can make payments for college tuition and children’s medical expenses or even help adult children make a down payment on a house without being subject to tax penalties is comforting.
As for the federal estate tax exemption, there is a slight increase expected in 2015. The exemption is expected to rise from $5.34 million to $5.43 million. While this may seem slight in the grand scheme of things, an extra $90,000 could be significant when it comes to leaving assets and property to loved ones.
As always, questions about how to meet your charitable giving and estate planning goals should be directed toward an experienced attorney.
The preceding is not legal advice.