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


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