Taxes may be one of the largest expenses an individual or family faces throughout the year. But with some planning, you can potentially owe less to the IRS and increase your overall financial health. As always, please consult a tax advisor for more information.
1. Consider annual gifting for estates exceeding or expected to exceed the lifetime gift exclusion of $5,340,000 for single individuals and $10,680,000 for married couples, which adjusts with inflation. Under the current law, individuals may gift up to $14,000 per year per person per year ($28,000 for married couples) without having to pay gift tax or utilize their lifetime exclusion. Additionally, payments made directly to an educational institution or medical provider for qualified medical expenses are not subject to the gift tax and may exceed $14,000, in accordance with Internal Revenue Code §2501.
2. Gift appreciated securities to charity. An individual avoids paying the capital gains tax on the position, and can also use the income tax deduction to mitigate tax liability, in accordance with Internal Revenue Code §2501.