Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

New Changes for Gift Tax Laws in 2016

Author: James F. McDonough

Date: February 11, 2016

Key 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.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Corporate Transactions: Best Practices for Successful Deals post image

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

Link to post with title - "Corporate Transactions: Best Practices for Successful Deals"
How to Conduct a Fair and Legal Employee Termination in 2025 post image

How to Conduct a Fair and Legal Employee Termination in 2025

Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]

Author: Angela A. Turiano

Link to post with title - "How to Conduct a Fair and Legal Employee Termination in 2025"
Admin Dissolution for Annual Report: What You Need to Know post image

Admin Dissolution for Annual Report: What You Need to Know

While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]

Author: Dan Brecher

Link to post with title - "Admin Dissolution for Annual Report: What You Need to Know"
What Is Antitrust Litigation Law? post image

What Is Antitrust Litigation Law?

Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]

Author: Robert E. Levy

Link to post with title - "What Is Antitrust Litigation Law?"
Dissolving Your Business: Essential Legal Steps to Protect Your Interests post image

Dissolving Your Business: Essential Legal Steps to Protect Your Interests

If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]

Author: Christopher D. Warren

Link to post with title - "Dissolving Your Business: Essential Legal Steps to Protect Your Interests"
The Role of Corporate Restructuring in Mergers & Acquisitions post image

The Role of Corporate Restructuring in Mergers & Acquisitions

Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]

Author: Dan Brecher

Link to post with title - "The Role of Corporate Restructuring in Mergers & Acquisitions"

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.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!