Save on Your 2014 Taxes by Sharing the Wealth

Save on Taxes in 2014 by Sharing the Wealth with Family

Many older individuals are taking a closer look at their finances today and are wondering how they can achieve specific financial goals that they have. Some may be completing tax planning steps, and others may be planning their estate. You may not realize it, but there are tax rules in place that may make it affordable and even beneficial for you to combine your tax planning and estate planning efforts together.

Save on taxes by sharing the wealth
Save on taxes by sharing the wealth


Common End-of-Life Plans

Many individuals will leave behind financial assets when they pass away, and these assets may include cash, stocks, bonds, mutual funds and other similar types of assets. If you are planning your estate today, you may be wondering how you can divide your assets as well as how you can decrease the estate or death tax that your loved ones may be burdened with upon your passing. While you may wait until your passing to divide your assets, there may be benefits to both you and your loved ones by sharing the wealth today.

The Effects of Giving Financial Gifts Now

In many families, the older family members have achieved a level of financial security and even wealth that younger family members have not yet achieved. This generally means that younger family members may be struggling financial and may have a considerably lower tax bracket to boot. The financial gift that you provide to them could benefit them by giving them money when they need it most, and it could benefit you by decreasing your own tax liability.


Giving Financial Gifts
Giving Financial Gifts

The Tax Rules for Lower Income Brackets

You may worry that gifting funds now would create financial hardship on loved ones by increasing their tax liability, but this may not be true. Consider that the tax rate for individuals in the bottom two tax brackets for long-term capital gains and dividends is zero percent. This means that those who are married filing jointly with taxable income of $73,800 or single with income of $36,900 or less will not pay taxes on the gift you give them. You will essentially transfer the shares into their name now to eliminate your tax burden without creating a tax burden for them.

The Right Decision For You

Before you gift your own assets, you should ensure that you will not need them later in life. It can be difficult to estimate the length of your living years, and some individuals who believe their end is approaching may still live a decade or longer. The last thing you want to do is to run out of money and still have many years ahead of you, so you should consider the amount of your gift carefully.

Consider the Value of the Assets

It is important to choose the gifts that you give to loved ones carefully. When you give assets that have depreciated in value since purchasing them, you will be giving away a deduction that you may benefit from. In order to prevent this and to maximize deductions for your benefit, only select assets to gift to loved ones that have appreciated in value.

Value of the Assets
Value of the Assets


Reducing the Size of Your Estate

There are limitations regarding the amount of assets that you can gift to loved ones each year, and there are personal financial reasons why you may want to limit the amount of your gifts as well. Generally, you want to think about reducing the size of your estate so that the amount that is passed on to loved ones after your death is minimized. This can reduce the amount of estate taxes that they will be responsible for paying.

Making Strategic Gifts

As you can see, there is some strategy involved in gifting your current assets to your loved ones during your living years. Making strategic gifts that have increased in value is important, and you also want to ensure that you will not need the funds yourself over the remainder of your life. You may consider making smaller donations now and increasing the amount of your gifts to loved ones later as you advance in age.


Making Strategic Gifts
Making Strategic Gifts


When to Seek Financial Assistance

Because of the potential tax liabilities in question for both you and your loved ones who will be receiving the gifts and because of the long term effect that the gifts can have on your own financial situation, you may consider seeking financial assistance before you make your gift.

By working with an estate planner, a financial adviser or an accountant who is skilled in this area, you will be able to make more informed decisions about your finances. There are dates when gifts must be made by in order to be included on the current tax year, so there is no better time than now to begin working with one of these financial professionals to begin planning your estate.

If you are in a situation where you may have more assets than you currently need and you plan to pass your assets on to your loved ones upon your death, you may be thinking that your loved ones could actually benefit from using those funds today. There are numerous personal, financial and tax benefits that all parties may enjoy when you give a financial gift this tax year.

However, before you make the decision to do so, thoroughly consider your own financial situation as well as the financial situation of the loved ones who may receive your gift. By doing so, you may be able to make a thoughtful decision that benefits all involved.

On top of all this, when it comes to your tax filings for yourself or clients, consider e-filing this year.  When considering solutions to efile 1099 forms, I recommend using services like  They’re an industry leader, and whether you use them or not, their service can be an excellent benchmark to measure other providers quality.

They handle everything – they efile 1099 and W-2 forms for you, as well as print and deliver your forms to recipients.  This will save you tons of running around and stress involved with organizing forms and postage, including running around to drop off the mail.  Their video is shown above, if you want to learn more.  If you have ideas on this topic to share, please visit our WordPress page here and leave your comments or suggest some useful links to explore on this topic.