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Posted: 10/23/2001 11:26:48 AM EDT
I understand that gifts of up to $10K are not taxable. But for whom? The gift giver, the lucky recipient, or both? Also, any ideas about the tax consequences of receiving the proceeds of an annuity as a death benefit. Is the money received considered taxable income to either the IRS or the kalif tax collectors? Thanks in advance. AR i.t.w's
Link Posted: 10/23/2001 3:55:14 PM EDT
[Last Edit: 10/23/2001 3:49:43 PM EDT by eje]
Let me take a stab at the first question: You can give away (either during your life or upon your death) a certain amount of property without incurring gift or estate taxes. The amount used to be about $600,000.00 but I think it's more now. Each year, however, you can give away up to $10K per person that does not count towards the $600,000.00 (or whatever it is now). If, however, you give away more than $10K to someone during a year, I think you have to file a gift tax return. You can choose to apply the amount of the gift exceeding $10K towards the lifetime $600,000.00 or you can choose to pay gift taxes currently on that amount. The above applies to the gift giver only. The lucky recipient does not have to pay taxes on any gift, no matter what size. If this is wrong, someone please jump in and correct me! I have no clue about the tax consequences of annunity proceeds. One place to start would be to call the annuity company and see if they can answer the question themselves. You might also want to check the IRS web page to see if they have any pamphlets that address the issue. Good luck, Ed
Link Posted: 10/23/2001 4:20:27 PM EDT
[Last Edit: 10/23/2001 4:15:32 PM EDT by AR_in_the_woods]
Found on [url]http://www.irs.gov/forms_pubs/pubs/p52505.htm[/url]
Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Proceeds not received in installments. [NOTE]If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death.[NOTE] If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death.
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Can somebody explain that to me?
Link Posted: 10/24/2001 1:09:47 PM EDT
I don't know anything about CA, but the Feds tax the decedent's estate or the donor. The recipient of a gift or bequest does not have to pay estate and gift tax or income tax. Your info from the IRS deals with payouts in excess of the date of death value. You have to pay tax on post death interest earned on the death benefit. Once again, check CA law because some states do tax recipients.
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