[Vision2020] House Passes Bill Linking Tax Cuts, Minimum Wage

[Scott Dredge]

--- Donovan Arnold wrote ---     > Many people donate money to family members so that don't have
> to pay as high of taxes.  For example, if you make $100,000, give
> $10K away to three children over age 18, that puts you in the 70K
> bracket instead. Why do that? If you are single and make over $100K
> the government takes more than if you make $70K, like most of everything
> between $70-100K goes to the government, about 95% of that. I know
> other family members give away wealth while they are living in order to
> avoid the 50% estate tax their relatives would have to pay if they got it after they died.

I don't believe any of this is correct Donovan.  You can give anyone $10k per year  (or maybe it's a little more nowadays like $11k although I would need to look this up) and they would not be required to pay taxes on that money.  You would not be allowed to deduct this from your income, so you would still pay income tax on this money.

The 2006 tax rate for a single filer for income earned above $75k is taxed at a rate of 28% (federal).  How do you get 95% going to the government?

As far as estate taxes go, in 2006 I believe the first $2,000,000 of an estate passing to a non-spouse is exempt from federal taxes.  I'm not up on the latest laws in estate planning, but a good estate planner would know all the exemptions and recommended stategies of breaking down your estate to take advantage of estate tax laws.

-Scott
 
   




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