James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comKey Contacts
Back
2016: new changes for gift tax laws
All gifts may be subject to IRS gift taxes, and some of those rules are becoming more stringent next tax year. According to a Motley Fool report, a prime example of a gift tax law that has become more strict is when gifts are given between U.S. citizens and foreign citizens. There are several issues taxpayers will need to take into account for all gifts, particularly from foreign cash gifts in 2016.
Giving gifts between U.S. and foreign citizens
The way gift taxes work for foreign citizens and U.S. citizens is that both transactions are subject to the same threshold limits. For instance, for any gift that is given that is beyond the $14,000 annual exclusion amount, even foreign citizens must file a gift tax return so that the exceeding amount can be reported. A primary benefit of the gift tax exemption is that the annual exclusion amount has a lifetime exemption that applies beyond the time of the transaction. For 2016, the lifetime exemption threshold will be $5.45 million, so a sizable amount is required for gift tax liability.
With regards to foreign citizens specifically, if these gifts are given to a spouse, there is an additional exemption that applies. The unlimited marital deduction enables spouses, even foreign citizens, to now have an annual $148,000 for 2016. However, if any gift between spouses of foreign citizens exceeds that threshold limit, the taxpayers must file gift tax returns. It is important to note, though, that these taxpayers can use the same lifetime exemption amount of $5.45 million.
An important change on receiving gifts from foreign citizens or companies
One of the unique factors of receiving gifts from foreign citizens is that the limitation amounts change. In 2016, taxpayers are still not subject to gift taxes on all gifts received, but they are required to report it on IRS Form 3520. For instance, if a gift received from a foreign citizen is in excess of $100,000, he or she must report it on IRS Form 3520. The important aspect of the new tax rules for next year is that gifts from overseas corporations or partnerships are subject to lower threshold limits because the gift values are adjusted for inflation every year. Next year, this limit will be $15,671.
- Practices: Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Why Secured Transactions Are Important
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Author: Dan Brecher
Changes to Qualified Small Business Stock Will Benefit Startup Founders and Investors
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly impacts federal taxes, credits, and deductions. A key change relating to Qualified Small Business Stock (QSBS) allows greater tax-free gains for investments in startups and other qualifying small businesses. Company founders and other investors should understand how the enhanced tax strategy works or risk missing […]
Author: Dan Brecher
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Author: Dan Brecher
What is Business Law and Why Is it Important?
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Author: Dan Brecher
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.