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Tax Planning Archives | Wealthspire Advisors

gst tax

Basics of Federal Estate, Gift and Generation-Skipping Transfer (“GST”) Tax – 2020 Update

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The bad news is that there is a Federal tax on assets that you give away during life, at death, and to individuals two or more generations below you. The good news is that this tax will only apply to the wealthiest Americans and, even so, there are strategies you can use to minimize or avoid its application. The Federal estate, gift and GST tax only kicks in above a certain dollar threshold. Furthermore, there are additional wealth transfer strategies that do not trigger any tax at all if structured properly. Taxable Gifts There is a Federal estate and gift…
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SECURE Act

The SECURE Act: What You Need to Know

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On December 16, 2019, Congress agreed to a spending bill which included a law called the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The SECURE Act was passed only by the House in the summer, but seemed to be falling by the wayside until it was attached to this spending bill. The new law is effective January 1, 2020. Below is some insight into the major implications of this new law, and some thoughts on how to lessen the impact of the most important change: the removal of the stretch RMD provisions on inherited IRAs. What did…
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gifting 2019

Do I need to make gifts before the end of the year?

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With all of the political uncertainty and recent changes in the tax law, our clients are wondering what to do about gifting. Below are answers to three commonly asked questions that we are getting this time of year. Note that this blog covers non-charitable gifts.* 1. Do I need to make gifts before the end of the year? Only if you are making annual exclusion gifts. You may give away $15,000 per person ($30,000 if gift-splitting with a spouse) each year tax-free. If you want to use your annual exclusion for 2019, the gift needs to be completed before the…
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new york estate tax cliff

Understanding New York’s Estate Tax “Cliff” – Updated January 2020

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It has been more than six years since some dramatic changes were made to New York’s gift and estate tax law. For many clients, the subject of the New York estate tax “cliff” continues to remain a source of confusion. This is for good reason. The New York cliff is not easy to understand, nor is it easy to know how it may impact your particular situation. The answers below are intended to guide those who remain baffled by the New York estate tax cliff. For a quick snapshot of the 2019 estate and gift tax rates for New York…
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roth ira

What is a Mega Backdoor Roth IRA?

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Most people have heard of Roth IRAs. Those that qualify typically contribute and those that do not qualify can sometimes find a way to do so, as Zach Gering indicates here. In either case, you can do MORE. Take a step back and understand plan types and limits Depending on your current occupational status and business structure, you may or may not be able to open any of the accounts noted above. For starters, any individual can open an IRA (with certain age/income requirements). All of the other plans must be company sponsored. An optimal retirement plan design permits annual…
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backdoor roth contribution

The Benefits of a Backdoor Roth Contribution

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It is that time of the year – with tax season comes retirement account contribution season! The most popular retirement account of the current decade is the Roth IRA. It offers tax-free growth, tax-free withdrawals after age 59.5, and no minimum distribution requirements. Unlike traditional IRAs, Roth’s are funded with after-tax dollars. There is no tax deduction for contributing. Evaluating whether to contribute to a pre-tax or Roth IRA is a common exercise. A prevalent misconception is choosing a pre-tax account is the best option. This is mostly because the investor expects that his tax rate will decline in retirement.…
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gst tax

Important Gift Tax and Trust Income Tax Reminders

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As tax season is now in full swing, below are some important gift tax and trust income tax return reminders: Gift Tax Returns The lifetime exemption from gift and estate tax was $11,180,000 per person in 2018. Currently it is $11,400,000 per person for 2019. Generally, gifts made directly to a medical provider or educational institution on behalf of someone do not count against your lifetime exemption. In addition, donors have an annual exclusion from gift tax of $15,000 per donee. This means that a donor may give $15,000 to each of his or her three children, for example, without…
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moving abroad tax

Moving Abroad for Work? Here’s How You’ll be Taxed

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The following refers to citizens and resident aliens of the United States who are not otherwise exempt.   Do I still have to pay U.S. income tax? Yep, sorry - the United States is one of only a few countries that taxes its citizens on their worldwide income, regardless of where they earned that money. Additionally, note that because of the Foreign Account Tax Compliance Act of 2010 (FATCA), foreign and offshore banks will report any of your assets held there to the U.S. government.  The reach of the IRS extends far and wide. However, you may be eligible to…
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cliff

Mitigate New York’s Estate Tax Cliff with Smart Estate Planning and Gifting Strategies

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While the large increase in the federal estate tax exemption has provided many with federal estate tax relief, New Yorkers must continue to plan for New York estate tax.  For a quick review of the New York Estate Tax “Cliff” basics, see the “Understanding New York’s Estate Tax “Cliff” blog post. What is the current exemption from New York estate tax again? The current New York estate tax exemption amount is $5,740,000 for 2019. Under current law, this number will remain until January 1, 2020, at which point it will rise again with inflation. Who does the Cliff affect? Everyone…
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tax season

Tax Season: It’s Getting to Be That Time of the Year!

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A Recap of Impending Tax Law Changes I know, it’s not April 15th yet, and I’m not necessarily in any hurry to get there.  But with some substantial changes to the tax law made effective in 2018, I figured it’s not too early to remind everyone what is in store for them from an individual tax perspective heading into filing season 2019: Forms 1040A and 1040EZ have been eliminated, so everyone will be using the standard Form 1040. The Form 1040 has been redesigned and is supplemented by new Schedules 1 through 6: Schedule 1 reports various types of income,…
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