People always tend to make their family and friends happy during holiday seasons, and this holiday season is not an exception. The federal gift tax aims to help people avoid paying the federal estate tax by giving away their money as gifts.
The 2018 maximum gift tax rate is 40%. Annually a person is allowed to gift up to $15000, and you can combine this with your spouse to make it $30,000.
Donations sent to registered charity organizations
Money sent to your spouse from the same state
Payment sent for covering education tuition
Money given for medical expenses
Bona fide business transactions
Present-interest” gifts up to the sums specified by the yearly eliminations illustrated above
Loans that mount up to $10,000 or more
Adding joint ownership to a real estate
Making payment for someone else’s debts
Gifting of real estates
There are so many ways of spending wisely during holiday seasons and avoiding future debts, here are some:
Using prepaid cards
Prepaid cards are credit cards that you pay prior to spending. When using prepaid cards, you are limited to use the amount of money in the bank account connected with the card. Some of the benefits of prepaid cards are;
Debt free holiday shopping.
When shopping with your credit card for the holiday, you restrict yourself to a specific budget to avoid debts come January, you might have also calculated all the holiday expenses using the free gift tax calculator. Since prepaid cards are accepted everywhere, and can be used like credit cards you can shop at any store or anywhere online whenever you wish.
Definite security to your private accounts as you shop.
Having a prepaid card is defense, no one can hack into your account and drain your funds. With prepaid cards, you are the only one who can access, it also not possible that someone fakes your identity and access your card.
Credit cards make excellent and affordable gifts.
This gifting method is better than gifting money. The first benefit of this method is, you will stick to your budget and not overspend. Secondly, the gift recipient can whatever they want anywhere they want. Unlike in-store gifts, you are forced to buy from the same store.
Take care around sales.
Sales during holidays is a common thing, and you might get carried away. Sales are a good way of saving, but you need to be careful, some items might be tagged to be on sale, but it is just the regular price. Always compare an item in every shop before buying, the internet has apps that can help you do this, you don’t have to move store by store. You can never save money by spending, always know when to stop, some people lack control when it comes to sales. As long as there is a sales sign, they’ll want to get everything. Most importantly, consider the significance of the discount before buying the item.
Choose cheaper traditions.
Instead of buying cakes, you can decide to bake one at home following online recipes. You can also invite friends and family, and they will come bearing gifts and food. This will save you from buying excess gifts for your children and even cooking a lot. Traditions are admirable, they, however, do not have to be so expensive. The presence of friends and family and voices of laughter all over will merely warm one's heart.
During the holiday season, people avoid federal estate tax by going for the gift tax. This way someone can gift tremendous assets and easily avoids the estate tax. When the gifter passes, the property will automatically belong to the recipient avoiding additional costs.
During holiday seasons, it’s essential to avoids extra costs and debts. Save and use a budgeted prepaid card, this way you will not buy things or gift you had not planned for therefore avoiding liabilities. Try to gift gifts that are not subject to gift task, or you will end up spending what you did not intend. If this is impossible, merge your accounts with your partners and the costs will reduce, this is called, gift splitting.
There are many ways to avoid gift tax, for instance, if you want to fund a friend’s or relative’s tuition fees, include money for expenses and rent, and this way you will have saved additional costs. Use the free gift tax calculator to prepare your budget. There are numerous scenarios you can use to save money. You need to be creative and think of helpful tips and tricks to use this is just an example.