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


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