The annual federal 529 gift tax exclusion is available for parents and grandparents who make contributions to the section 529 plan on behalf of their child or grandchild. The amount is $12,000 (or $24,000 for married joint filers) per year, per child.
Simply stated, you can contribute up to $12,000 without incurring a federal gift tax. Any amount exceeding the 529 gift tax exclusion limit is considered a taxable gift and must be reported on your federal gift tax return.
Ways to Benefit from the 529 gift tax exclusion
There are ways to make large contributions as a 529 gift tax exclusion and avoid paying the gift tax. You can contribute one lump sum that is equal to five times the annual amount, up to $60,000 and still avoid the gift tax. The lump sum payment is treated as if you made the contributions evenly over a five year period. Any amount beyond the $60,000 within the same five year period is subject to the gift tax.
Another benefit to the 529 gift tax exclusion is that you can move assets from your estate that is otherwise taxable and still have ownership and control of those assets.
Misconceptions About the 529 gift tax exclusion
Parents and grandparents are often confused about the tax rules concerning the 529 gift tax exclusion. Some people assume that money given to someone for any purpose is taxable income that must be reported. The annual 529 gift tax exclusion is separate from income reported on your tax return. This income includes wages and profits from a business.
The gift tax is related to estate taxes that the government charges a person who dies with an excessive amount of money. Any person who dies in the United States with more than $2 million is charged a death tax if the excess amount goes to anyone other than their spouse.
The IRS has placed limits on the amount a person can gift to a person in one year. This is to prevent someone from giving away all of their money before they die to avoid paying estate tax. The current amount is $12,000 per recipient, per year. Any amount above the $12,000 is subtracted from the $2 million limit.
Another misconception many have about the 529 gift tax exclusion is that this amount is not taxed. The recipient of the gift amount that exceeds the estate tax exemption is taxed for that amount if you, the donor, are still alive and refuses to pay the gift tax.
Advantage Legal Seminars is one of the leading providrs of continuing legal education in the U.S. for more information on Advantage Legal Seminars CLE programs go to http://www.advantagelegalseminars.com/ or call (888) 267-6097
Thursday, February 05, 2009
Monday, February 02, 2009
Visa Information Updates
New I-9 (Employment Verification) Rule Effective April 3, 2009
On December 17, 2008, the Department of Homeland Security (DHS) issued an interim final rule changing the acceptable identity documents an employer may accept when verifying their employees’ eligibility to work when filling out Form I-9, Employment Eligibility Verification. The crux of the new rule is that employers may not accept any unexpired documents, such as passports, permanent resident cards, employment authorization cards or I-94s as proof of verification of an employee’s eligibility to work in the United States. While originally intended to go into effect on February 2, DHS has extended its effective date to April 3, 2009, with the notice and comment period extended to March 4, 2009. This extension is in response to President Obama’s recent request to all federal agencies that pending regulations be subject to the review and approval of his appointees.
Applications for Naturalization Must Be Filed at USCIS Lockbox Facilities
As of January 22, 2009, those seeking to be naturalized (except for military cases) must submit their citizenship applications (N-400) and supporting documents to two USCIS lockbox facilities, one located in Phoenix, Arizona, the other in Lewisville, Texas, depending on the state of residence of the applicant.
Outgoing Attorney General Mukasey Issues Decision on
Right to Counsel in Removal Proceedings
On January 7, 2009, Attorney General Michael Mukasey ruled that aliens in removal proceedings have no constitutional right to counsel, including government-appointed counsel, because such proceedings are civil, not criminal, in nature. Therefore, an alien in removal proceedings has no basis on which to complain about ineffective assistance of counsel. However, the Attorney General also ruled that the Department of Justice may, as a matter of administrative grace, reopen proceedings where an alien shows that he was prejudiced by the actions of private counsel. To show prejudice, an alien seeking to reopen proceedings must show that his lawyer’s failings were egregious, and that it is more likely than not that, but for the lawyer’s failings, the alien would have been entitled to the relief he was seeking. In cases where the alien does not seek to have his case reopened within the applicable time limit (generally, thirty days), he must show he exercised due diligence in discovering and seeking to cure his lawyer’s allegedly deficient performance. Matter of Compean, et al., Interim Decision #3632, 24 I&N Dec. 710, (A.G. 2009).
Did You Know?
DHS to reconsider license provisions of Real ID Act.
New Department of Homeland Security Secretary Janet Napolitano said that she will rethink a federal program that would require every state to issue secure driver’s licenses following minimum standards set by the 2005 Real ID Act. Currently, states have until the end of 2009 to issue new licenses that, prior to issuance, would require applicants to prove they are in the country legally under Real ID. Some states, such as Washington, have been offering enhanced licenses on a voluntary basis, requiring proof of citizenship and identity but do not meet the standards of Real ID. Programs such as Washington’s cost less than compliance with the Real ID law.
Source: Thomas Frank, Feds to rethink license mandate, USA Today (January 22, 2009).
U.S. Department of Justice Orders Collection of DNA from Immigrant Detainees. The Department of Justice issued a new regulation allowing for the collection of DNA samples from non-citizen, non-resident persons detained under the authority of the United States, which includes those undocumented persons in immigration detention centers. The final rule went into effect on January 9, 2009.
Advantage Legal Seminars is one of the leading providrs of continuing legal education in the U.S. for more information on Advantage Legal Seminars CLE programs go to http://www.advantagelegalseminars.com/ or call (888) 267-6097
On December 17, 2008, the Department of Homeland Security (DHS) issued an interim final rule changing the acceptable identity documents an employer may accept when verifying their employees’ eligibility to work when filling out Form I-9, Employment Eligibility Verification. The crux of the new rule is that employers may not accept any unexpired documents, such as passports, permanent resident cards, employment authorization cards or I-94s as proof of verification of an employee’s eligibility to work in the United States. While originally intended to go into effect on February 2, DHS has extended its effective date to April 3, 2009, with the notice and comment period extended to March 4, 2009. This extension is in response to President Obama’s recent request to all federal agencies that pending regulations be subject to the review and approval of his appointees.
Applications for Naturalization Must Be Filed at USCIS Lockbox Facilities
As of January 22, 2009, those seeking to be naturalized (except for military cases) must submit their citizenship applications (N-400) and supporting documents to two USCIS lockbox facilities, one located in Phoenix, Arizona, the other in Lewisville, Texas, depending on the state of residence of the applicant.
Outgoing Attorney General Mukasey Issues Decision on
Right to Counsel in Removal Proceedings
On January 7, 2009, Attorney General Michael Mukasey ruled that aliens in removal proceedings have no constitutional right to counsel, including government-appointed counsel, because such proceedings are civil, not criminal, in nature. Therefore, an alien in removal proceedings has no basis on which to complain about ineffective assistance of counsel. However, the Attorney General also ruled that the Department of Justice may, as a matter of administrative grace, reopen proceedings where an alien shows that he was prejudiced by the actions of private counsel. To show prejudice, an alien seeking to reopen proceedings must show that his lawyer’s failings were egregious, and that it is more likely than not that, but for the lawyer’s failings, the alien would have been entitled to the relief he was seeking. In cases where the alien does not seek to have his case reopened within the applicable time limit (generally, thirty days), he must show he exercised due diligence in discovering and seeking to cure his lawyer’s allegedly deficient performance. Matter of Compean, et al., Interim Decision #3632, 24 I&N Dec. 710, (A.G. 2009).
Did You Know?
DHS to reconsider license provisions of Real ID Act.
New Department of Homeland Security Secretary Janet Napolitano said that she will rethink a federal program that would require every state to issue secure driver’s licenses following minimum standards set by the 2005 Real ID Act. Currently, states have until the end of 2009 to issue new licenses that, prior to issuance, would require applicants to prove they are in the country legally under Real ID. Some states, such as Washington, have been offering enhanced licenses on a voluntary basis, requiring proof of citizenship and identity but do not meet the standards of Real ID. Programs such as Washington’s cost less than compliance with the Real ID law.
Source: Thomas Frank, Feds to rethink license mandate, USA Today (January 22, 2009).
U.S. Department of Justice Orders Collection of DNA from Immigrant Detainees. The Department of Justice issued a new regulation allowing for the collection of DNA samples from non-citizen, non-resident persons detained under the authority of the United States, which includes those undocumented persons in immigration detention centers. The final rule went into effect on January 9, 2009.
Advantage Legal Seminars is one of the leading providrs of continuing legal education in the U.S. for more information on Advantage Legal Seminars CLE programs go to http://www.advantagelegalseminars.com/ or call (888) 267-6097
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