Start Tax Planning Early This YearSubmitted by Karstens Investments on August 2nd, 2016
By Ryne Bessmer
Instead of waiting until the end of the year to do your charitable gifting and tax planning, here are some things you could do now to make things easier around the holiday season. First, take advantage of the Gift Tax Exclusion. This exclusion allows you to give up to $14,000 to any person without incurring any federal gift tax consequences. If you are married, your spouse can also give $14,000 to the same donee, which means that as a couple, you could give a single person $28,000 this year with no tax consequences.
Secondly, consider helping your children, grandchildren or other relatives with their education costs by setting up a state-sponsored 529 plan. These can give you a state tax deduction (depending on your state) and allow you to keep control of the money to use at your discretion for the recipient’s higher education.
Finally, instead of giving cash to your favorite charity, consider gifting appreciated assets that you have owned for more than a year, such as stock, real estate, or mutual fund shares. As long as you have owned the aforementioned assets longer than a year, you are able to deduct their full value from your taxes, and the charity will not have to pay the capital gains. The only person who loses out on that deal is Uncle Sam, and we are okay with that.