Inheritance and Gifts

If you receive an inheritance, you donít pay tax on it.
If you receive a gift, you generally donít pay tax on it.

You can give a friend or relative the annual exclusion ($13,000 in 2009) and not report it or pay tax on it. For instance, you can give your married daughter $13,000 in 2009 and not have to file a gift tax return. Your spouse can give her another $13,000 and he/she doesnít have to file anything either. Thus a married couple can give anyone $26,000 without any paperwork. Exceeding the annual exclusion requires one to file a gift tax return, but no tax will be due until your lifetime gifts exceed $1 million.

Estate and gift taxation gets real complex really fast, so call me with any questions.

Charitable Giving

Charity is a wonderful thing, even if you didnít save taxes by doing it. But, you do.

A charitable deduction is an itemized deduction-and can be cash, goods, or even mileage.

The recipient must be a charity-not an individual. You can help your neighbor but you canít deduct it.

Charities include churches and other entities exempted from taxation by the internal revenue code. Make sure the entity you choose to support is a real charity. They should have a letter from the IRS to prove it.

Buy or Lease a Car?

The choice between buying and leasing a car is not an income tax issue.

Do not take tax advice from a car salesman.

The cost of owning and operating a car is a tax deduction if you use it for a business or charitable purpose. If you use your car 50% for business, then 50% of the cost is a deduction. Leasing a car, even if your company is paying the lease, does not make it any more or less deductible.