TAX & FINANCIAL FORUM

We frequently publish new articles about how to master your taxes, money — and your life. Here are a few of our most recent pieces.

TAX BENEFITS FOR PEOPLE WITH DISABILITIES

Individuals with disabilities, as well as parents of disabled children, are eligible for several income tax benefits. This article explains some of these tax breaks.

ABLE Accounts – A federal law allows states to offer specially designed, tax-favored ABLE accounts to people with disabilities. Qualified ABLE programs provide the means for individuals and families to contribute and save to support individuals who became blind or severely disabled before turning age 26 in maintaining their health, independence, and quality of life.

The states run the ABLE programs authorized by the federal tax statute. A state that has established an ABLE account program can offer its residents the option of setting up one of these accounts or contracts with another state that offers ABLE accounts. Contributions totaling up to the annual gift tax exclusion amount, currently $16,000, can be made to an ABLE account each year, and distributions are tax-free if used to pay qualified disability expenses.

Through 2025, a tax provision allows the beneficiary of the ABLE account (i.e., the disabled person) to contribute a maximum additional amount each year, equal to the lesser of:

• The beneficiary’s taxable compensation for the year, or
   
• The prior year’s inflation-adjusted poverty level (so using the 2021 poverty level amounts for a one-person household, the 2022 ABLE beneficiary’s contribution could be up to $12,880. The equivalent amount for residents of Hawaii is $14,820 and $16,090 for Alaska. 

However, the extra contribution isn’t allowed if the beneficiary’s employer contributes to a qualified retirement plan on the beneficiary’s behalf.

The beneficiary’s additional contribution qualifies for the non-refundable saver’s tax credit, which, depending on the beneficiary’s actual income, can be 10%, 20%, or even as much as 50% of up to the first $2,000 contributed, for a maximum credit of $1,000.

Disabled Spouse or Dependent Care Credit – A tax credit is available to individuals who incur childcare expenses for children under the age of 13 at the time the care is provided. This credit is also available for the care of the taxpayer’s spouse or of a dependent of any age who is physically or mentally unable to care for himself or herself and lived with the taxpayer for more than half the year. This is also true for individuals who would have been dependents except for the fact that they earned $4,400 or more (2022) or filed a joint return with their spouse. The credit ranges from 20% to 35%, with lower-income taxpayers benefiting from the higher percentage and those with an adjusted gross income of $43,000 or more receiving only 20%. The care expenses qualifying for the credit are limited to $3,000 for one and $6,000 for two or more qualifying individuals. Note that for 2021 only, the credit rate and care expenses allowed were significantly higher and the credit was refundable.

Medical Expense Deductions – In addition to the “normal” medical expenses, individuals with disabilities can incur other unusual deductible expenses. However, to gain a tax benefit, an eligible taxpayer must itemize his or her deductions on Schedule A, and the taxpayer’s total medical expenses must exceed 7.5% of their adjusted gross income. Eligible expenses include:

• Prostheses 
  
  
• Vision Aids – Contact lenses and eyeglasses 
  
  
• Hearing Aids – Including the costs and repair of special telephone equipment for people who are deaf or hard of hearing 
  
  
• Wheelchair – Costs and maintenance 
  
  
• Service Dog – Costs and care of a guide dog or service animal. The IRS has stated that “the costs of buying, training, and maintaining a service animal to assist an individual with mental disabilities may qualify as medical care if the taxpayer can establish that the taxpayer is using the service animal primarily for medical care to alleviate a mental defect or illness and that the taxpayer would not have paid the expenses but for the disease or illness.”
   
• Transportation – Modifications or special equipment added to vehicles to accommodate a disability 
  
  
• Impairment-Related Capital Expenses – Amounts paid for special equipment installed in the home or for improvements may be included as medical expenses if their main purpose is medical care for the taxpayer, the spouse, or a dependent. The costs of permanent improvements that increase the property’s value may be partly included as a medical expense. The costs of the improvement are reduced by the increase in the property’s value. The difference is a medical expense.
  
  If the improvement does not increase the property’s value, the entire cost is included as a medical expense. Certain improvements made to accommodate a home to a taxpayer’s disabled condition, or to that of the spouse or dependents who live with the taxpayer, do not usually increase the home’s value, so the costs can be included in full as medical expenses. A few examples of full-cost medical expenses include constructing entrance or exit ramps for the home; widening entrance and exit doorways, hallways, and interior doorways; installing railings, support bars, or other modifications; and adding handrails or grab bars. 
  
  
• Learning Disability – Tuition fees paid to a special school for a child who has severe learning disabilities caused by mental or physical impairments, including nervous system disorders, can be included as medical expenses. A doctor must recommend that the child attend the school. Fees for tutoring from a teacher who is specially trained and qualified to work with children with severe learning disabilities may also be included if the tutoring is recommended by a doctor. 
  
  
• Special Schooling – Medical care includes the costs of attending a special school designed to compensate for or overcome a physical handicap to qualify the individual for future normal education or for normal living. This includes a school that teaches braille or lip reading. The principal reason for attending the school must be its special resources for alleviating the student’s handicap. The tuition for ordinary education that is incidental to the special services provided at the school, as well as the costs of meals and lodging supplied by the school, are also included as medical expenses. 
  
  
• Nursing Services – Wages and other amounts paid for nursing services can be included as medical expenses. Services need not be performed by a nurse if the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient’s condition, such as giving medication, changing dressings, and bathing and grooming the patient. These services can be provided in the home or another care facility. Generally, only the amount spent for nursing services is a medical expense. If the attendant also provides personal and household services, these amounts must be divided between the time spent performing household and personal services and the time spent on nursing services. 
  
  
• Impairment-related Work Expenses – An employed individual with physical or mental disabilities may claim a deduction for impairment-related work expenses for attendant care at the individual’s place of employment or for other expenses at the job location that enables the individual to work. Those with a physical or mental disability that limits their being employed, or substantially limits one or more major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working are eligible to deduct their impairment-related work expenses if they itemize deductions. These expenses are claimed as a miscellaneous itemized deduction on Schedule A, not as a medical expense. 

If you have questions about any of the disability-related tax benefits discussed in this article, or if you have questions concerning potential medical expenses not discussed above, please give this office a call.
 

Tax and Personal Finance Tips for New Parents

 

Expanding your family? Whether you’re in the planning stages or your bundle of joy has already arrived, raising a child is one of life’s greatest joys — and most significant expenses. And we’re not just talking about the costs of college. Parents are often shocked by the constant outflow of cash that starts days after bringing baby home from diapers to daycare, from braces to bicyclesparents are often shocked by the constant outflow of cash that starts days after bringing baby home.

While you can do nothing to avoid incurring these expenses, you can definitely soften their impact by educating yourself about what to expect and planning ahead. Below you’ll find a helpful list of mistakes to avoid, resources not to miss, and steps you can take to boost the chances that bringing up a baby will be less of a drain and more of a pleasure.

Start with a Realistic Budget

Has anybody ever told you that all you need for a baby is a drawer for a bed, a bottle, and a bunch of cloth diapers? There are plenty of people who sing that song, and we have news for you — they’re wrong. If you’ve already given birth then you’re already familiar with some of the bills, but if you’re still in the planning stages, make sure that you include these expenses as you prepare:

• Prenatal and postnatal doctor visits for both mom and baby 
• Birth and delivery costs 
• Baby clothes, nursery furniture, car seats, playpen, glider, highchair, strollers, baby bath, etc. 
• Childcare 
• Diapers and wipes, baby medications and ointments, shampoos, etc. 
• Formula and bottle-feeding supplies or breast pumps and milk-storage bags, or both 

And that’s just for the first year or two of parenting. As your child gets older you will need to add on the costs of toys, clothing, bicycles, braces, summer camps, birthday parties …. And if one of the two of you plan to stay home with your child – even part-time – that will significantly impact your disposable household income.

While the government reports that the average cost of raising a child from birth through adulthood is $233,610, those averages include the people who spend the very most, as well as those who spend the very least. To get a realistic sense of how much you can expect to pay, talk to your friends, and ask them to share what they’re spending, especially when it comes to childcare. Those figures can be truly eye-popping.

Take Advantage of Tax Breaks

Plenty of people kid around about their child representing a tax break, but there is truth behind the joke. The government has created several credits and deductions to help alleviate some of the financial burdens of raising a child, but these breaks are not automatic. You have to fill out your tax forms properly and claim the advantages to which you are entitled. Make sure that you are familiar with everything that is available to you. These may include:

• Child tax credit – if you have a dependent child and your annual household income falls within the government’s guidelines, you can cut the taxes that you owe significantly 
  
  
• Child and dependent care credit – if you and your partner or spouse file your taxes jointly and pay to have your child cared for by a daycare, nanny, or babysitter, or even to have them attend a summer camp or a before-or-after school program so that you can work or look for work, you can claim a significant portion of these expenses on your income tax.
   
• Earned income tax credit – depending upon income, parents with one or more dependent children may be eligible for the earned income tax credit (EITC), which cuts tax liability 

Most Important of All is to Start Thinking Ahead

Perhaps the most essential advice any new parent can be given is to start planning for the future now – and maybe even yesterday. There are plenty of people who spend the early years of their child’s life saying that they don’t know how they’re going to pay for college – and not doing anything about it. The people who start putting small amounts of money away on a regular basis when their kids are small – and who keep doing so throughout their child’s life – are the ones who sleep soundly as college grows nearer. It is never too soon to create a financial plan for your own retirement as well as to address your child’s education, as well as to cushion against an emergency. Your comprehensive financial plan should include:

• A retirement fund, whether it’s an employer-sponsored 401(k) or an IRA that you set up for yourself 
  
  
• An emergency fund to help you through anything from a job loss to auto repairs or unexpected medical expenses. Most people suggest having at least three months’ worth of living expenses available, and some say saving enough for six months without an income.
   
• A college fund. Opening a 529 college savings account and making consistent deposits is something you’ll thank yourself for later. 
  
  
• A life insurance policy and a will. It’s nice to run on the assumption that you’ll always be around to support your family. But accidents and unexpected illnesses happen, and far too many people who don’t include life insurance in their economic plans leave behind families that have to deal with their grief and economic situation. It’s also a good idea to take care of basic legal documents like a will, an advance healthcare directive, and power of attorney.

The Basics

If you’re in the planning stages, it’s a very good idea to start saving now, ahead of the costs you’re about to incur for doctor’s bills, hospital fees, and anything not covered by insurance, as well as for income not earned during last weeks of pregnancy/post-partum. You’ll also want to investigate the benefits and family leave policy that your employer offers.

Preparing for a new family member can be overwhelming. For assistance with putting yourself on the right financial path, contact us today. We can help you review your current situation and create a plan that will work for today as well as for the future.

 A lot of people say, “more money, more problems.” While that saying is partially true, I think a lot of us would be only too happy to get a little more green in our bank accounts considering the current inflation situation.

Especially those working for minimum wage. 

Right now, the federal minimum wage sits at $7.25/hr. In an inflationary environment with the federal minimum wage reaching its lowest value since 1956, an increase seems like a logical step, at least to some.

The low bar for wages, coupled with a desire for more flexibility in the work environment (and more joy in the daily grind), has made “The Great Resignation” last longer than many expected. 

It’s also made the idea of independent contracting (aka side-hustling) become more palatable. 

Furthermore, some current employees are being presented with this “option” by their dollar-stretching employers looking to save on employment taxes … and sometimes they/you are being pressured into a wrong classification, in the midst of an unethical tax dodge on the part of the employer.

Before I dive into all that though, we know you’re trying to make your dollars stretch in the midst of it all. And that’s why we’d love to take a look at your 2022 tax liability and help you make a plan to reduce your tax burden – BEFORE it’s too late. Sorting things out now will ensure things work more in your favor come filing time:
www.afitonline.com/appointments

Now, making a choice between being an employee or an independent contractor (assuming everything is on the up and up) means you’ll have to take into consideration the pros and cons of both. Good thing I’m talking about that today…

Mike Mead's 
"Real World" Personal Strategy Note 
Contractor or Employee – That Is the Question
“Economic independence is the foundation of the only sort of freedom worth a damn.” - H. L. Mencken

Got a dream job? Maybe you dream of independence and setting your own hours. Or maybe you dream of dependability, a steady paycheck, and health insurance somebody else helps pay for. 

The grass is always greener in work life, and both “employee” and “independent contractor” offer plusses and minuses. 

What’s involved in being one or the other – especially when it comes to money?  

Definitions

Before we get into the everyday money issues, let’s look at the definitions of the two kinds of workers. Here’s how the IRS classifies them: 

Contractor – “People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors.” 

Another rule is that the boss can dictate to an independent contractor the desired result of the work but not how it will be done and where. 

Independent contractors are self-employed – and here we get into taxes. Independent contractors pay self-employment tax on what they earn, a check to the feds, and possibly the state four times a year. 

Employee – If you are somebody’s employee, you’re probably painfully aware that taxes get taken right out of your paycheck – the FICA, or Social Security tax, and Medicare and income tax withholding. Usually, you also get some perks on the boss’s dime. In exchange, the boss controls not just the results of your job but how and where you do it. 

We realize that in many work situations a boss is clearly treating somebody like an employee but not carrying an employer’s share of the burden of taxes and paying for benefits (Uber’s gotten into some trouble over this lately). Employer misuse/abuse of these classifications costs workers big time in Social Security and other protections FICA pays for. The U.S. Department of Labor is working on a final rule to clarify who’s an independent contractor and who isn’t.

Beware of bosses who try to blur the line. 

The good and the not-so-good

What are other costs and benefits of one type of work status over another? 

Employee: The first major plus – aside from a steady paycheck, and even that may come in second – is subsidized health insurance. The average price of health insurance for a middle-aged, healthy individual is almost seven grand a year. If an employer helps with even half of that, it’s like extra money you should add to your yearly pay.

Other typical advantages of being an employee: paid sick leave and holidays; fixed hours; and more backstop if you lose your job (unemployment payments). Other perks like paid tuition are also becoming more common and employers often offer retirement plans such as 401(k)s and will, after a while, match the money you put in. 

Nothing’s perfect, though. Your wages and job security are largely in the hands of somebody else at a full-time gig. And if you take the standard tax deduction, you generally can’t itemize. Some have said that you actually pay more tax as an employee. 

Independent contractor: You set your own hours and, as much as you can sell it, secure your own raises by asking for and getting more money per job. On the flip side, you have to provide your own health insurance (unless you can be on someone else’s policy) and calculate your own taxes. 

You file returns every calendar quarter (mid-month in January, April, June, and September), plus your annual tax return. This is your income tax as well as your self-employment (SE) tax. (Here’s the form, by the way, and we’re happy to help you with this.) 

A good rule is to send about a third of your quarter’s income to the IRS and your state tax authorities – and failing to budget for this is a bad idea. You’ll be hit with penalties and interest if you fall too far short in your SE taxes. 

At April filing time, though, you get to add up all the additional deductions you can get as an independent contractor; these lower your reported income and your SE taxes, too. You can deduct costs of supplies, some professional services, business use of your home or car, travel, and others. 

Note that you need excellent records and that these deductions change a lot, so checking with us (or even having us take care of things for you) is a good idea.

 

It’s hard to decide which way you want to go when it comes to income, and truthfully, it can be dependent on where you’re at in your life. Sometimes people who “independent contract” for years end up getting a 9-5 gig just to be able to make fewer decisions and focus on other life pursuits. Other times, people are tired of the restrictions and expectations of being an employee and want more flexibility or space to grow.

Whatever path you choose, the one thing we can guarantee is that we’ll be here to help you with the tax side of things and make sure you get all that’s owed you by the IRS:
www.afitonline.com/appointments

On your team,

Mike Mead, EA, CTC
Alliance Financial & Income Tax
807 NW Vesper Street
Blue Springs, MO. 64015
P - 816-220-2001 x201
F - 816-220-2012

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What Do You Do If The IRS Wants to "Audit" Your Tax Return

 

The word “audit” tends to strike fear in the hearts of American taxpayers, but the truth is that not every audit is a result of a problem, or that the Internal Revenue Service suspects you of wrongdoing. There are several reasons why the IRS might want to audit your taxes and financial information, and there are several steps that you can take to make the process as painless as possible.

In light of an uptick in identity theft scams involving tax audits and returns, we want to take a moment before delving into this topic to stress that the IRS will never institute an audit process via telephone or email. Taxpayers are always alerted of an upcoming audit by U.S. mail.

Reasons for IRS Audits

Though it is certainly true that some audits are generated by irregularities, the IRS can also request an audit to verify the information contained within your tax papers, to correct a simple mistake such as failing to attach a Schedule, or because the individual taxpayer has some kind of involvement with other taxpayers — such as business partners or investors — whose paperwork raised questions. You may even have been selected for audit as a result of a random selection process designed to gauge taxpayer returns to see how they compare to national norms.

Different types of audits

There are three types of audits conducted by the IRS. In all cases, the taxpayer will be notified of the review by mail.

• Correspondence audit – Generally a result of a low-level error or omission, the agency sends out information to the taxpayer referencing the mistake and requesting that revised information be submitted via mail.
  
  
• Office audit – This type of audit is more intimidating, as it requires the taxpayer to appear at an IRS office, bringing their documentation along with them. These audits are often the result of deductions or credits that are out of the norm, such as an unusually large medical expense deduction for which the agency requires documentation in the form of invoices and payment receipts.
  
  
• Field audit – The most intrusive of all audits, a field audit involves IRS agents coming to the taxpayer, usually visiting either their place of business or their home in order to review the tax return in detail.

How to prepare for an audit

Receiving notice of a tax audit will put a stutter in the step of even the most meticulous and upstanding taxpayer, but the nerves set off by the notice can easily be offset with the knowledge that you’ve kept good records and maintained copies of all pertinent documents. If you haven’t been keeping careful records, understand that in the face of an audit it will be up to you to prove that you deserve whatever deduction you’ve taken, so amend your ways and start keeping well-organized files of all financial statements, invoices, and receipts. Doing so will not only be a substantial help in case of an audit, but it will also be remarkably helpful should you need to assess your business’ health or put together a financial statement for potential investors or when applying for a loan.

If you are uncomfortable with addressing the IRS questions on your own, you have the right to be represented by a professional of your choice. That might be a CPA, an attorney, or an enrolled agent. This person or persons can go with you or for you to any face-to-face meetings. There is no requirement that you attend an audit session unless the IRS specifically requests your presence.

After the audit is over, you will be provided with a report. If you agree with the contents of the report, you can simply sign it or whatever assenting form the auditor provides to you.

The taxpayer bill of rights

You may think yourself at the mercy of the IRS, but Congress enacted a taxpayer bill of rights that specifically outlines the IRS’ tax collecting abilities as well as the protections offered to taxpayers in the face of IRS collections.

The taxpayer bill of rights includes:

• Right to be Informed 
• Right to Quality Service 
• Right to pay no more than the Correct Amount of Tax 
• Right to Challenge the IRS’s position and be Heard 
• Right to Appeal an IRS’s decision in an Independent Forum 
• Right to Finality Right to Privacy 
• Right to Confidentiality Right to Retain Representation
• Right to a Fair and Just system 

What if you don’t agree with the audit decision?

Knowing that you have rights is nice, but pushing back against the decision of an IRS examiner can feel challenging. If you’ve complied with all of the examiner’s requests and now find yourself with a Revenue Agent Report that you disagree with, there are specific steps that you can take. You can:

• Ask for an informal conference with the examiner’s manager before the deadline provided within the report. 
• Ask for an Appeals conference to occur before the deadline provided within the report. 

If you have received a Statutory Notice of Deficiency, you can also file a petition with the tax court.

How to Get Through an Audit

There is no shame in being unnerved by an IRS audit, but there are several ways that you can minimize the stress that you feel.

• Don’t hesitate to request a postponement if you need time to get your documents together. 
• Familiarize yourself with your rights 
• Be honest 
• Discuss your audit strategies with your Authorized Representative, whether that is your CPA, attorney, or another person. That person will respond directly to the assigned IRS agent. 
• Don’t try to fake your way through an audit. Have the information that is requested so that you can get through it more quickly. 
• Don’t hesitate about reaching out to the auditor if you disagree with the examination report that they have produced. 
• Remember that if you are unable to pay a tax liability or disagree with the auditor’s assessment, negotiation is a possibility.

One of the most important decisions you can make in the face of an audit letter is to work with an experienced tax representative who can help you with both your preparations and your response. For information on the assistance, we can provide, contact our office today.

CUTTING THE IRS OUT OF YOUR GIFTS

 If you are financially well off, you may want to gift money or property to family members or others you care about. If that is the case, there are some gift tax issues you should be aware of. Oh yes, the government even taxes gifts if they are large enough, so it is best to know the rules; otherwise, you may end up making a gift of taxes to the IRS.

The gift tax rules provide two exclusions from gift tax, the annual exclusion and the lifetime exclusion:

Annual Exclusion – The annual exclusion is periodically adjusted for inflation and is currently $16,000 per individual. Thus, you can give $16,000 a year to as many individuals as you wish without any gift tax or gift tax return filing requirements.

Lifetime Exclusion – On top of the annual exclusion, there is a lifetime exclusion that is linked to the estate tax exclusion, which is also inflation adjusted, and for 2022 is $12,060,000. Thus, in addition to the $16,000 annual per donee exclusion, there is a $12.06 million exclusion that applies to the aggregate of all gifts more than the $16,000 per year per donee gift.

There are complications to utilizing the lifetime exclusion. You must file a gift tax return to claim the lifetime exclusion, and the amounts of the lifetime exclusion used as an exclusion from gift tax will be tracked on any gift tax return(s) filed and will reduce the estate tax exclusion. So for example, if in 2022 you make a gift of $3 million to your child, and you haven’t made gifts in the past that exceeded the annual per donee gift tax exclusion, you will pay no gift tax, but you will have reduced your remaining lifetime exclusion to $9.06 million ($12.06 million less $3 million). If you make more large gifts in the future that use up your remaining lifetime exclusion, not only will you then be subject to gift tax on the excess gifts, but at your passing, and assuming the value of your estate is large enough to be subject to estate tax, you will have no estate tax exclusion left to offset the estate’s value, so it will all be subject to estate tax.

CAUTION - The estate tax rates and the lifetime exclusion have long been a political football. They date back to 2006, when the lifetime exclusion was $2 million. Congress can change the current exclusion at any time. In fact, recent proposed legislation would reduce the exclusion to $5 million.

Special Tuition/Medical Exclusion - In addition to the current $16,000 annual exclusion, a donor may make gifts that are totally excluded from the gift tax in the following circumstances:

• Payments made directly to an educational institution for tuition. This includes college and private primary education. It does not include books or room and board. 
  
  
• Payments made directly to any person or entity providing medical care for the donee. 

In both cases, it is critical that the payments be made directly to the educational institution or health care provider. Reimbursement paid to the donee will not qualify. The tuition/medical exclusion is often overlooked, but these expenses can be quite significant. Parents and grandparents interested in lowering the value of their estate should strongly consider these gifts.

Gift Splitting - A husband and wife can each make annual exclusion gifts, thereby increasing the exclusion from the current $16,000 to $32,000 per year per couple. However, only one of the spouses may be in a financial position to make the gifts. Spouses may elect on the gift tax return to treat a gift made by one spouse as being made by both spouses. Gift splitting can be used for annual exclusion gifts, lifetime exclusion gifts, and gifts above the lifetime exclusions.

Example - Gift Splitting - John and Jane are married and have two children. In a year when the annual exclusion limit is $16,000, they would like to exclude $64,000 ($16,000 x 2 donors x 2 donees) in gifts. Jane received a large inheritance some years back; John has only a modest estate. Jane gives the children $32,000 each. Then the couple elects to gift split so that the $32,000 gift is treated as given one-half by Jane and one-half by John (or $16,000 each). The gifts all qualify for the annual exclusion. Even if both spouses have sufficient resources to make gifts, gift splitting is useful when the husband and wife have different estate planning goals.

For residents of community property states, if community property is given, gift splitting is not necessary. Regardless of who holds the property’s title, or who “makes” the gift, the property is owned one-half by each and is therefore given one-half by each.

Gifts of Property – Gifts of property have some of their own circumstances to consider. For instance, where gifts are made of appreciated property such as stocks or real estate, although the donor’s gift is considered at the fair market value (FMV) for purposes of valuing the gift, the beneficiary of the gift assumes the donor’s basis. As a result, the beneficiary of the gift is assuming any taxable gain the donor would have had if he or she had sold the property instead of gifting it and will have to include as income that gain when and if the gifted property is later sold.

Although the FMV of traded stocks is readily available, the same is not true of most other types of property, in which case a qualified appraisal will be needed to determine the value as of the date of the gift.

Finally, keep in mind that a beneficiary inherits property at its FMV at the date of the decedent’s death as opposed to assuming the decedent’s basis, as happens in the case of a gift.

If you are contemplating gifting money or property to an individual, it may be appropriate to consult this office in advance to minimize the impact on estate taxes and help with any gift tax filings that may be required.