Are Holiday Gifts Subject to Federal Gift Tax?

Web Admin - Thursday, December 21, 2017
Barrington estate planning and tax lawyerThe holiday season is a time of giving, but as you celebrate this time with your family and friends, you may need to be aware of a certain omnipresent aspect of American life: taxes. While it will likely only apply to people who earn a high income or have large financial assets, it is still a good idea to understand the Federal gift tax and the impact it may have on the gifts you give and your estate.

What Is the Gift Tax?

When a person transfers property to someone else without receiving something of equal value in return, this is considered a gift by the Internal Revenue Service (IRS), and it may be subject to gift taxes. The person who gives the gift to someone else (known as the donor) is responsible for filing tax forms for the gift and paying the gift tax.

Gift Tax Exclusions

Certain types of gifts are excluded from taxes, including gifts given to one’s spouse, gifts given to a political organization, and tuition or medical expenses paid on someone’s behalf. For other gifts, an annual exclusion threshold applies. That threshold is $14,000 for 2017, and the threshold for 2018 will be $15,000.

The annual exclusion applies to gifts given to an individual person, so if a donor gives multiple people gifts of less than $14,000 each, they will not owe any gift taxes. For spouses, the exclusion is doubled, so a married couple can give a gift of up to $28,000 without owing gift taxes.

In addition to the annual exclusion, everyone is entitled to a lifetime exemption known as the basic tax exemption. For people who die in 2017, that exemption is $5,490,000, and in 2018, the exemption will increase to $5,600,000. The taxable amount of gifts greater than the annual gift tax exclusion threshold can be applied toward this lifetime exemption, and taxes will not be owed on these gifts. However, any amount of the basic exemption used during one’s lifetime will be deducted from the amount of their estate that is exempt from estate taxes upon their death.

Contact a Schaumburg Estate Planning Attorney

Determining how gift taxes will affect your finances and your estate can be a complex undertaking. If you want to make sure you are protecting yourself and providing for your family’s financial security, the skilled attorneys at Drost, Gilbert, Andrew & Apicella, LLC can work with you to ensure you have met your legal requirements and have the financial resources in place that your family needs. Contact our Rolling Meadows estate planning attorneys today at 847-934-6000 to schedule a personalized consultation.

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.


The Effect of the Affordable Care Act on Income Taxes

Web Admin - Tuesday, January 28, 2014

illinois obamacare tax lawyerThe Affordable Care Act (ACA or "ObamaCare") is a sweeping reform that touches many different areas of the law. One particular area that it impacts is the income tax structure. The law makes many small changes, such as increasing the threshold for deducting a medical expense to 10 percent of a person's adjusted gross income, or adding a new 0.9 percent tax to wages above $200,000. 

But, one particular change can have a large effect on income from real estate sales and trusts. The ACA adds a new 3.8 percent tax on a person's net investment income. But, this new tax only applies to certain people, and often, but not always, those in higher tax brackets.

The Effect on Real Estate Sales

The 3.8 percent tax applies to some sales of real estate, but not to all sales. First, the tax only applies to people making more than $200,000 a year or $250,000 for married couples filing jointly. Even for those people, not all sales qualify. This is because the first $250,000 of profit on the sale of the home does not count as income if the home is the person's primary residence.

And, that number goes up to $500,000 for married couples. A primary residence is a home that has acted as the sellers “main home” for two of the last five years. By way of example, suppose a married couple making over $250,000 a year sold their primary residence for a net profit of $650,000. They would only pay the 3.8 percent tax on the $150,000 in profits that exceed the $500,000 cap.

The Effect on Trusts

Even though the tax only applies to individuals making more than $200,000, it can also affect trusts with more than approximately $12,000 in net investment income, regardless of the beneficiary's income. This means that the tax can affect people earning less than $200,000 if they have an interest in such a trust. In this instance, the 3.8 percent tax applies to all net investment income in excess of the $12,000 cap. However, the law contains many exemptions and exceptions. For instance, certain types of trusts that do not qualify as trusts for purposes of income tax also fall outside of this law.

If you have questions about how the ACA affects your taxes or think you may be subject to the new net investment income tax, contact an Arlington Heights tax attorney today. Call 847-934-6000 to speak to a member of our team. We serve many Northwest Suburban areas including Rolling Meadows, Des Plaines, Crystal Lake, and other nearby communities.

About the Author: Attorney Jay Andrew is founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.

Recent Posts


Illinois insurance claim dispute lawyer Barrington injury attorney insurance negligence drug crime no contest clauses Illinois personal injury Arlington Heights TBI attorney Illinois personal injury lawyers pizza emoji insurance dispute attorney trustee Inverness insurance attorney Illinois tax attorney Arlington Heights real estate lawyer real estate attorneys cell phone tower data ObamaCare texting and driving Illinois Human Rights Act healthcare claims life insurance claims Barrington personal injury attorney Inverness personal injury attorney School Visitation Rights Act insurance agent negligence Crystal Lake personal injury attorney Illinois mortgages BUI fatal car accidents Rolling Meadows meal breaks Schaumburg civil litigation attorney Barrington boating accident attorney construction accidents tax attorney Legal Info unfunded trust Deer Park medical malpractice attorney boating DUI health insurance dispute Kenilworth estate planning lawyer employment lawyer Schaumburg personal injury lawyers insurance denials severance agreements criminal record Schaumburg insurance lawyers Illinois employment law attorney license suspension Crystal Lake medical malpractice law firm car crashes IRA benefits Palatine traffic lawyer Illinois estate planning Illinois lawyer Buffalo Grove traffic lawyers agent Inverness accident lawyer bicycle accidents real estate leasing traffic accidents whistleblower protections Illinois living will Deer Park traffic lawyer traffic laws minimum wage Crystal Lake will lawyer Long Grove estate planning Chicago estate planning Illinois business lawyer Buffalo Grove probate lawyer traffic violations defense Inverness civil lawyer independent contractor Illinois estate planning attorney truck collisions Illinois Smoke Detector Act South Barrington real estate attorney Landlord Tenant Ordinance crossover accidents Schaumburg personal injury attorney liability Rolling Meadows traffic attorney Illinois insurance attorney Inverness injury lawyer compensatory time automated cars distracted driving accident victims traffic tickets healthcare civil litigation Chicago insurance claim attorneys estate planning for college students wills bike accident commercial leases Arlington Heights wills and trusts lawyer Fair Labor Standards Act Illinois employee rights attorney. traffic violations Rolling Meadows insurance dispute lawyers, insurance dispute Crystal Lake employment lawyer job lawyers cell phone power of attorney for healthcare insurance claim denials insurance attorney living wills Riverwoods estate planning lawyer Palatine civil litigation lawyer Illinois Trust Code Barrington estate planning attorney Des Plaines drug lawyer Schaumburg estate planning lawyer llinois Real Estate Lawyers Association Buffalo Grove employment lawyer contracts trucking accident lawyers Arlington Heights employment law attorneys living trust Employment Discrimination Law Illinois criminal defense attorney employment attorney insurance claim delay Illinois employment attorneys preventing accidents Illinois driving without license Inverness probate lawyer Rolling Meadows marijuana attorney Illinois small business rent to own real estate contracts Schaumburg employment attorney federal regulations for LLCs Des Plaines medical malpractice attorney boating under the influence Arlington Heights Traffic Lawyer Kenilworth estate planning attorneys drug crimes lawyer Des Plaines criminal attorney overtime pay icy parking lots Illinois estate planning law firm underfunded trust Liquor Control Act personal injury law firm FMLA sexual harassment Rolling Meadows tax attorney real estate contract Schaumburg real estate lawyer Arlington Heights car accident lawyer Illinois pet lawyer real estate closing murder charges living trust benefits Jay Andrew Arlington Heights wills and trusts attorneys Palatine civil attorney workers compensation Crystal Lake law firm drug crimes Joliet general practice lawyers Barrington medical malpractice lawyers Illinois Sales Representative Act Illinois probate lawyer Rolling Meadows probate lawyer natural gas insurance claims Barrington criminal lawyer federal crimes Rolling Meadows estate planning attorney Super Mario traffic crimes denial of life insurance insurance adjusters traumatic brain injuries employee misclassification insurance agents Illinois traffic accident lawyer Palatine probate lawyer breach of contract low-ball insurance settlement BAC Illinois wills and trusts attorneys Arlington Heights injury attorney Schaumburg medical malpractice lawyer estate planning Retaliatory Discharge ken apicella Barrington business law firm Affordable Care Act medical malpractice compensation paid sick leave insurance claim dispute wage theft digital evidence pedestrian accident Rolling Meadows Traffic Lawyer vacation home Crystal Lake criminal defense attorney Illinois employment lawyer Home Sale Contingencies workplace sexual harassment Chicago will attorney, social media platforms, Illinois estate planning lawyer, creditors Barrington attorney Arlington Heights tax lawyer Des Plaines real estate attorney Crystal Lake injury attorney Barrington personal injury lawyer real estate trucking accidents marijuana crimes attorney Palatine employment lawyer Des Plaines tax law firm construction contracts overtime violations Arlington Heights lawyer Illinois business law atorneys insurance claim dispute attorney Rolling Meadows criminal attorney insurance dispute Palatine Attorney Arlington Heights personal injury attorney new real estate form wills and trusts Illinois workers compensation attorney Schaumburg estate planning attorney personal injury claim Barrington estate planning lawyer Buffalo Grove traffic attorney ACA Illinois will lawyer Illinois insurance claims lawyers right to work sole proprietorship life insurance lawyer Illinois employment law Buffalo Grove injury lawyer Family Medical Leave Act criminal law Policy Cancellation controlled substance Deer Park criminal attorney modern family estate planning medical malpractice eluding a police officer privacy laws estate planning trusts LLCs Arlington Heights personal injury lawyer slip and fall institutional trustee South Barrington real estate lawyer condo association Illinois traffic ticket lawyer Crystal Lake medical malpractice attorneys DUI defense food poisoning Crystal Lake pedestrian accident lawyer child safety Rolling Meadows car accident lawyers Schaumburg personal injury lawyer pet law Palatine drug lawyer Illinois boating accident lawyer Crystal Lake personal injury lawyer Palatine traffic accidents work unions Illinois medical malpractice claim Deer Park employment law attorney Des Plaines insurance attorney jet ski accidents Barrington employment law attorney spinal cord injuries Deer Park traffic accident attorney Buffalo Grove criminal defense lawyer Schaumburg estate attorney employee rights DUI attorney Des Plaines civil attorney estate tax Barrington workers compensation attorney liens wrongful termination, employment law, whistleblower protections, Illinois employment laws, discrimination in the workplace employees preventable medical errors Arlington Heights medical malpractice lawyer Rolling Meadows corporate lawyer criminal defense appealing an insurance claim probate claims process Illinois employment laws Illinois traffic laws Illinois construction accident attorney Des Plaines DUI attorney subcontractor murder license revocation bicycle dooring accidents golf accidents uninsured motorist Palatine insurance lawyer Schaumburg criminal law attorney gift tax exemption, estate planning, estate planning strategies, Illinois estate planning, South Barrington estate planning attorneys insurance claim insurance denial appeals Chicago trucking accident attorney Illinois workers compensation lawyer digital assets Arlington Heights employment attorney dog bites Rolling Meadows Attorney suspended license estate planning lawyer blended families Arlington Heights estate planning attorney Des Plaines accident attorney denied insurance claims Inverness elder law lawyer estate planning, death tax, succession plans, business estate plans, Barrington estate planning lawyers Illinois medical malpractice lawyers wrongful termination Inverness real estate attorney real estate zoning Arlington Heights accident attorney Mount Prospect real estate lawyer GM ignition switches special needs trust commercial real estate Deer Park accident attorney Illinois real estate Buffalo Grove car accident lawyer filing a medical malpractice claim breathalyzer test Palatine real estate lawyer changes to mortgage law product liability Inverness traffic law firm sexual images Illinois law Self-Directed IRA Accounts DUI penalities Schaumburg probate attorney employment law, Illinois employment laws consent to a search jet ski Federal Food Drug and Cosmetic Act Rolling Meadows insurance lawyer Inverness real estate lawyer Rolling Meadows real estate attorney drunk driving statistics dynasty trusts Long Grove real estate attorney Home Remodeling Repair Act Des Plaines pet law attorney Arlington Heights wills and trusts attorney Chicago corporate attorney pedestrian injuries, pedestrian fatality Crystal Lake car accident attorney internet Schaumburg elder law lawyer trusts civil litigation attorney DUI commercial leasing Illinois wills and trusts Thanksgiving texting while driving workers compensation benefits Rolling Meadows DUI lawyer Illinois insurance claim attorney life insurance Chicago estate planning lawyer motorcycle accident lawyer taxes corporate law Des Plaines claims law firm Arlington Heights Attorney employment contract Illinois insurance lawyer Palatine corporate law attorneys elder law workers comp Illinois speeding lawyer guardianship attorney Rolling Meadows boating crash lawyer FSLA Rolling Meadows personal injury lawyer insurance claim denial Barrington criminal defense lawyer personal injury Illinois trucking safety Des Plaines injury law firm Crystal Lake employment law attorney Schaumburg criminal attorney hiring employees manufacturing DGAA landlord Crystal Lake business law attorneys Buffalo Grove insurance claim dispute lawyers probate claims Illinois wrongful termination lawyer caretaker rights Exclusions gift taxes Arlington Heights pedestrian accidents Barrington litigation attorney Whistleblower Claims Barrington real estate lawyer digital assets, digital fiduciary, estate planning, digital content, Long Grove estate planning lawyers Rolling Meadows business lawyer reckless homicide Illinois job attorney Food and Drug Administration's Food Safety Modernization Act personal injury attorney Des Plaines drug crimes lawyer Transfer on Death Instrument Illinois real estate lawyer power of attorney Palatine trusts lawyer Illinois car accident attorney Crystal Lake accident attorney vacation home fines civil rights violation pedestrian-automobile accident Detainer Actions rollover accidents Palatine corporate attorney personal injury claims startup company Palatine personal injury lawyer mass shooting Buffalo Grove personal injury lawyer Illinois home inspection senior citizens Rolling Meadows employment attorney construction accidents, personal injury, wrongful death, Arlington Heights personal injury attorneys, workers' compensation real estate attorney irrevocable trust car accidents Des Plaines collections attorney Rolling Meadows criminal lawyer Arlington Heights trucking lawyer revenge porn Rolling Meadows personal injury attorney unpaid overtime Illinois workplace discrimination attorney Arlington Heights criminal lawyer Schaumburg wrongful death attorney Illinois civil litigation lawyer Chicago car accident lawyer Illinois pedestrian accident attorney car accident Palatine punch death medication errors Arlington Heights car crash attorneys Crystal Lake estate planning lawyer deed transfer homestead rights Illinois corporate lawyer business litigation hands free device Buffalo Grove real estate attorney Chicago employment attorney pregnant women Schaumburg underinsured motorist Palatine employment attorney loopholes Illinois Wage Payment and Collection Act Chicago lawyer fiduciary rule delay Buffalo Grove law firm Rolling Meadows traffic law firm murder defense personal injury accidents digital information Illinois LLC creation car crash injuries disability benefits Schaumburg injury lawyer Des Plaines personal injury lawyers Illinois medical malpractice attorney Deer Park real estate law firm drunk driving accidental death benefits driving fiduciary rule expungement Illinois Illinois medical malpractice case Buffalo Grove personal injury attorney Schaumburg drug defense lawyer Mt Prospect Attorney insurance disputes, Illinois insurance disputes, Illinois insurance dispute attorneys, denied insurance claims, Arlington Heights insurance dispute attorneys Schaumburg employment law attorneys Illinois injury lawyer Illinois attorney Des Plaines motorcycle accident attorney Rolling Meadows drug defense attorney employee discrimination Class A misdemeanor Rolling Meadows employment law attorney liability claims Deer Park personal injury lawyer forming a corporation in Illinois Crystal Lake traffic attorney auto accidents pet bites Illinois Probate Act of 1975 personal injury lawyer Illinois insurance disputes Illinois Transfer on Death Instrument Kenilworth estate planning attorney involuntary manslaughter speeding Rolling Meadows accident lawyer advance healthcare directive insurance disputes rollover car crashes estate plan holiday statistics Palatine estate planning lawyer criminal defective products lawyer Schaumburg construction accident lawyer life insurance policy trench injuries anesthesia errors traffic offenses fault based insurance Chicago insurance law firm Deer Park workers compensation lawyer boating accidents Illinois motorcycle accident lawyer Schaumburg car accident attorney Arlington Heights insurance attorney condo landlord tenant law Attorney Ken Apicella Buffalo Grove medical malpractice lawyers Rolling Meadows litigation lawyer Des Plaines pay when paid contract unauthorized overtime Barrington drug crime attorney Schaumburg Attorney brain injury Palatine elder law attorney Illinois red light cameras IRS Crystal Lake insurance lawyer Illinois employment law attorneys slip and fall accidents digital media accounts, estate planning, Arlington Heights estate planning attorney, probate process Barrington employment law firm back injuries Crystal lake insurance dispute attorney blood alcohol content car collision license reinstatement Colin Gilbert DNR hit and run accident pain and suffering estate planning, digital assets, Revised Uniform Fiduciary Access to Digital Assets Act, Illinois digital assets, Illinois estate planning, DMV bad faith insurance claims surgical mistakes probate fees income distribution deducation distracted driving accidents Palatine law firm Long Grove real estate lawyer nursing home negligence Rolling Meadows personal injury lawyers products liability Illinois insurance dispute lawyers rest breaks Chicago biking tips problem employees Illinois traffic attorneys Illinois traffic attorney Illinois bicycle safety Barrington employment attorney field sobriety test Forcible Entry owner responsibility Do Not Resuscitate medical malpractice claims Mount Prospect wills and trusts lawyers Long Grove wills and trusts attorneys installment contracts Crystal Lake tax lawyer Palatine criminal defense lawyer drug possession residential real estate license Crystal Lake employment attorney Barrington civil litigation attorney Chicago employment lawyer CAM in terrorem provision car accident lawyer natural gas explosion Chicago attorney Rolling Meadows employment law attorneys Palatine workers compensation lawyer denied insurance claim motorcycle accident Inverness DUI lawyer Palatine construction attorney BAIID Crystal Lake traffic lawyer real estate lawyer dram shop law employment law, meal breaks, rest breaks, hotel employees, Des Plaines employment law attorneys Mount Prospect elder law attorney Palatine injury attorney Des Plaines personal injury lawyer Long Grove estate planning attorneys Illinois employment law firm small business Crystal Lake civil litigation lawyer employment contract, employment law, employment at-will, Deer Park employment law attorneys, contract, caregiver Palatine business attorney probate Illinois DUI attorney Buffalo Grove corporate attorney Illinois trusts attorney Schaumburg corporate attorney privacy Illinois rollover accident lawyers car crash financial advisors IRELA head on collisions medical malpractice, missed diagnosis, delayed diagnosis, medical mistake, Deer Creek medical malpractice lawyers living trust vs will cell phone accidents social media after death loss of consortium Deer Park DUI lawyer Rolling Meadows insurance dispute lawyers estate planning attorney Schaumburg traffic lawyer comparative negligence trauma after an accident first degree murder defective products Illinois workplace lawyer Inverness estate planning lawyer trust payments marijuana mortgage car accident lawyers estate attorney Deer Park motorcycle accident lawyer deadly crashes comp time rumble strips medical marijuana Chicago traffic lawyer Illinois defective products attorney foreclosed rental property Arlington Heights traffic attorney Illinois collections attorney drugs traumatic brain injury attorney fees home inspection lawyer clemency Arlington Heights wills and trusts lawyers investment property dealing with problem employees capital gains tax operating agreements Crystal Lake bike accident lawyer Rolling Meadows medical malpractice lawyers spinal cord injury foreclosure Illinois registered agent Rolling Meadows insurance attorney employment law personal injury, auto accident injuries, delayed injuries, serious injuries, Des Plaines personal injury attorneys elder abuse wrongful death IRA trust transfer Long Grove estate planning attorney Barrington Illinois estate planning lawyer Crystal Lake medical malpractice lawyer premises liability Illinois personal injury attorney medical research Inverness corporate attorney TBI Colin H. Gilbert Des Plaines Traffic Lawyer Barrington Traffic Lawyer Fourth of July college kids insurance dispute, insurance dispute lawyers, insurance claim denial, insurance claim delays, Rolling Meadows insurance dispute attorneys Des Plaines real estate lawyer Palatine employment law lawyer probate lawyer PTSD Des Plaines personal injury attorney unpaid assessment swimming pools Illinois personal injury lawyer Illinois insurance claim dispute lawyers traffic deaths underage DUI Crystal Lake pet attorney Illinois Workers’ Compensation Commission POA Illinois elder law attorney Chicago will attorney pedestrian accidents Illinois jet ski accident lawyer Crystal Lake car accident lawyer