estate

The Tax Cuts and Jobs Act has changed the way unearned income is taxed for your children. In the past, interest, dividends and other unearned income used to be taxed in phases. The first $1,050 was tax-free, the next $1,050 was taxed at the child’s rate and any additional was taxed at the parent’s tax rate.

The act now calls for all of a child’s unearned income to be taxed using the estate and trust tax table. Call us if you have questions about how the changes will affect your situation.

Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter.

Giving on a yearly basis could trim both your estate and income taxes. First, there’s the annual exclusion for gifts. Currently, you can give $14,000 annually to any number of recipients without paying federal gift tax. Married couples can double this amount by gift-splitting – a gift of $28,000 from one spouse is treated as if it came half from each.

Why giving is a two-way street

Gifts do more than help out children who need the money. They also reduce your estate so your estate will pay less estate tax upon your death. Apart from annual gift giving, you can currently transfer (during your lifetime or through your estate) a total of $5.49 million with no estate or gift tax liability. On amounts above this threshold, you or your estate will be faced with taxes at the current top rate of 40 percent. So a consistent program of annual gift giving might create substantial tax savings.

Note that gifts to individuals do not entitle you to an income tax deduction. A gift isn’t a charitable contribution. Conversely, a gift doesn’t constitute taxable income to the recipient. Gifts of income-producing property may, however, reduce your taxable income. Once you’ve given the property away, the recipient (not you) receives the income it produces and pays any income tax due on it.

Giving can be easy

One advantage to annual gift giving is that it is relatively simple to do, especially if you’re giving away cash. Another advantage is flexibility. You’re not locked into anything; you can see how much you can afford to give away each year. You can give away anything – cash, stock, art, real estate, etc. Valuation is the fair market value on the date of the gift. Subsequent appreciation, if any, belongs to the recipient’s estate (not yours).

Before you give away assets, be sure you will not need them yourself to provide income in later years. Consider the impact inflation will have on your resources.

Proper planning is essential in this area; get professional assistance before you do any gift giving. Contact our office if we can help.

Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter.

For a parent, estate planning is especially important. The first priority is to make sure your children are protected in the event that something happens to you. Your estate plan should appoint guardians for your minor children, as well as provide for their financial well-being.

Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter.

The last thing you want to be bothered with when you are grieving is sorting out the finances of your departed loved one. Here are some suggestions to make the process a little easier.

Prioritize. Focus on the most pressing tasks you face. Make sure you have access to the right accounts in order to secure living expenses for yourself and any people the departed person supported. Close any of their outstanding debts.

Gather documents. Get at least a dozen copies of the death certificate. Insurance companies, government agencies, creditors, and banks will require a copy before they share the departed person’s financial information. Having the person’s financial information ready (including a will, insurance policies and retirement plans) will make the process easier.

Notify others. You will need to notify several agencies, institutions and companies of the death. These include the Social Security Administration, the deceased person’s employer, insurance companies, credit bureaus, credit card companies, the post office, utility companies, and creditors.

Take time where you can. Some financial issues can wait. Insurance proceeds and inherited assets can remain where they are for six months to a year. When dealing with intense grief, many people make hasty financial decisions they later regret. Make sure you take time to process your grief and address important financial decisions with a clear head.

Get professional help. If your loved one has not named an executor of his or her estate, you may be faced with meeting this obligation. If he or she died without a will, each state has laws that affect the settlement process, and it’s probably not something you should tackle on your own. Tax returns may need to be filed, and the tax basis of assets at time of death may need to be established. Working with a financial professional will help you navigate the process and minimize your hassle during a difficult time.

Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter.

Do you have a financial plan that works for both you and your spouse? Here are suggestions that can help.

Organize your finances. Get a handle on your income and spending, by both of you individually and as a couple. By reviewing the overall picture of how you spend money, you can focus on potential problem areas.

Set goals. How much will you accumulate in bank accounts and investments over the next three years? Five years? Ten years? Have you anticipated future expenses? Say, for example, you’re dreaming of a vacation in Europe for your anniversary. You’ll want to start saving now so you won’t need to finance the trip with credit cards.

Build an emergency fund. How much is enough for emergencies? As a general rule, set aside three to six months of your combined gross income in easily accessible accounts, such as savings or money market accounts.

Save for retirement. Participate in your employer’s retirement plan and contribute at least as much as the amount your employer will match. The earlier you start saving, the more you’ll accumulate. It’s that simple.

Formalize an estate plan. Have an attorney draft a will and set up a financial power of attorney so your assets are distributed according to your wishes in the event of death or incapacity.

For more financial planning advice, contact us.

Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter.