LISTEN TO LAWRENCE
Dear clients and friends,
One of my last emails concluded my series on FDIC (and NCUA) insurance protection. Both you and I are probably thankful for that 😊. One of my readers told me “Why bother learning about this because if you go to FDIC.GOV they have a calculator that will figure it out for you.” This is true. Go to FDIC: Electronic Deposit Insurance Estimator (EDIE) edie.fdic.gov. On the other hand, it is good for you to learn about this information. I, too, learned a lot in this process and I know it will make me a better lawyer.
Now on to other things:
Are life insurance premiums tax deductible? I have heard so many different answers and also looked online and I am confused. I was told that they are considered a gift to my kids. Instead of giving them the $15,000 per year, can I write this payment off as a gift?
Life insurance premiums are not deductible on your income taxes.
If you own the policy on your life, the payment of the premium will also not be considered a gift for gift tax purposes. If someone else owns the policy on your life, then your payment of their premium obligation will be a gift by you to them. The first $15,000 per year, per person is not counted but any more than that will be subject to the gift tax system (not the income tax system).
We want to give our son $100,000 to buy a house but we were told that we can’t give him more than $30,000 per year ($15,000 each) without having to pay gift tax. Is this true?
The answer is no and yes…..but probably no! If you give away more than $15,000 per year, per person it triggers the gift tax system but probably no tax is due. The reason for this is that we all have an $11.58 million exemption from federal gift taxes (New York has no gift tax). If you give more than $15,000 in any given year, you are required to file a gift tax return but no tax is due until you have given away more than $11.58 million during your life. So, if you have not given away that amount, or never will for that matter, feel free to help your son. You technically will need to file a gift tax return, but no tax will be due.
I hope this helps.
Please forward this information to your friends and relatives.
As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
Let’s stay connected.
LISTEN TO LAWRENCE