Hey Tim, aren’t all taxes the same? Not really, they all apply to different areas of finances and all need to be handled in specific ways. As an accountant in Reno, I want to take a second to discuss the three main taxes for individuals: income, estate and gift. However, before I start I want to make sure you understand these taxes are a lot more complex than I am going to explain them. If you have questions or concerns, you should contact Reno’s Best CPA.
Let’s start with the income tax; this is something that most people are familiar with. The income tax is on income you have received. Nevada is unique in this aspect because we don’t have a state income tax. Talk to an accountant to help you determine what income is taxable and what income is not.
Next, let’s look at the gift tax. It is complex and is one that you need to be aware of. The IRS defines it as, “a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.” The simple way to explain this tax is if you give a certain amount of money to an individual then you will have to pay a tax on it.
Like many taxes, there is an annual exemption for the gift tax. The exemption is $13,000. Therefore, you can give any individual up to $13,000 with no problem. If you give them more than $13,000 in the year then you have to file a special gift tax return. Visit my blog for more information about the gift tax.
Lastly, let’s look at the estate tax. Unlike the income and gift tax, the estate tax doesn’t regard the living. The IRS’ website defines it as “a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death. The fair market value of these items is used.” The total of all of these items is your ‘Gross Estate.’ Therefore, if you or somebody you knows passes away, there may be a tax on your estate. You should talk with an accountant today to start planning on ways to limit this tax. For more information about the estate tax, visit my blog or the IRS’ website.
Please remember that these are just three of the main taxes on individuals. There are many more and the three that I have talked about are a lot more complex. I just wanted to give you an overview of these three. To make sure you are handling all taxes in your best interest you need to consult an accountant in Reno.