If you or a well-off relative are facing the gift and estate tax, here’s a planning opportunity often overlooked: paying expenses for loved ones. Such payments, structured correctly, do not represent gifts.
The monies spent by you on the qualified payments reduce your net worth and taxable estate, but they do no harm to your income, gift, or estate taxes. Further, the loved one who benefits from your help does not incur any tax issues.
As unusual as this sounds, with the qualified payments, you operate in a tax-free zone.
Even if you don’t have a gift tax problem today, use the tax-free method because, who knows, you could win the lottery tomorrow.
If you have questions about the qualified payment strategy, please contact us.
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.