Taxes

December 6, 2022

Gift Tax 101: What You Need to Know

Giving gifts is a nice thing to do for a friend or family member, but, as the saying goes, “no good deed goes unpunished” – at least when it comes to the IRS.

The federal government imposes a gift tax that is currently 40%. And if you live in Connecticut, your gift may also be subject to the one-and-only state-level gift tax in the country. Lucky you.

The good news is that because of the annual and lifetime gifting exemptions as well as several categories of gifts that are not subject to the gift tax at all, the majority of Americans will rarely (if ever) have to pay a gift tax.

September 18, 2018

Annual Inflation Adjustments for 2019

by Czepiga Daly Pope & Perri LLC

Wolters Kluwer came out with their annual inflation adjustment projections which reflect several increased thresholds and ceilings you should be aware of. The IRS is expected to release the official amount later this year.

Of particular note:

1) The trust and estate maximum income tax bracket (37%) is reached at $12,750, up from $12,500.

July 3, 2018

IRS Unveils New 1040 in the Form of a Post Card

by Czepiga Daly Pope & Perri LLC

Taxpayers will be able to file federal income taxes starting next filing season on a new postcard-sized Form 1040. The IRS officially released the draft 2018 Form 1040 on June 29th.

Draft Form 1040

According to the IRS, the new base Form 1040 will be finalized this summer. The IRS plans to work with the tax community to finalize the form. “This early release is part of our standard process to invite stakeholder input into draft forms before finalizing them,” the IRS spokesperson told Wolters Kluwer.

June 12, 2018

Connecticut Governor Approves Estate Tax Changes

by Czepiga Daly Pope & Perri LLC

By Paul Czepiga

We wrote not too long ago about some Connecticut estate tax changes that occurred due to legislation passed in October 2017. That legislation tied the Connecticut gift and estate tax exemption to the federal exemption amount.

The federal exemption amount was, at the time that Connecticut tied it self to it, $5.49 million. Unexpectedly in December 2017, just two months after Connecticut’s change, as part of President Trump’s tax overhaul, the federal exemption amount suddenly increased to $11.18 million.

June 8, 2018

IRS And States to Fight Over Income Tax Deductions for State and Local Taxes

by Czepiga Daly Pope & Perri LLC

States, including Connecticut, are looking for loopholes to soften the impact of a new $10,000 cap on the state and local tax deduction also known as SALT. And the IRS wants to put a stop to local governments using creative workarounds.

In the meantime, in response to the reform, Connecticut legislature passed a new law making several state and local changes. Two of its provisions are designed as workarounds to SALT:

The first provision is a new entity-level income tax on most pass-through businesses that is offset by a state personal or corporation income tax credit for the entity’s members. Because entity-level taxes remain deductible at the federal level, pass-through businesses will be able to claim this new state tax as a deductible expense against their federal taxes and pass along the benefit of the deduction to their members.
The second provision is that municipalities will be allowed to provide a property tax credit to eligible taxpayers who make voluntary payments to municipally-approved nonprofits (i.e. community supporting organization) and is designed to allow taxpayers that make these payment to claim a federal contribution deduction for the donation to the nonprofit.

November 28, 2017

2 Connecticut Tax Changes You May Not Know About

by Czepiga Daly Pope & Perri LLC

Chances are, that you are at least somewhat familiar with the new provisions in the Connecticut budget bill.

But do you know about the increased income threshold for the Social Security income tax deduction?

Or the new organ donation expense deduction?