As we approach the end of the year, we become busy with holiday celebrations, visits with family and friends, and vacation. Our to-do lists grow longer and many items and resolutions are pushed to the next year. However, it is important to keep in mind various deadlines, whose dates are not as flexible as some of our other goals.
- Minimum required distributions
If you are age 70 ½ and have a Traditional IRA, you must withdraw your minimum required distribution by December 31st. If less than the minimum required distribution is withdrawn, a penalty of up to 50% of the amount not taken is assessed.
In 2006, Congress enacted the IRA charitable rollover provisions. This allowed up to $100,000 of the annual required minimum distribution to be excluded from gross income if distributed directly to an eligible charitable organization. Since 2006, the provision has been extended in two-year increments. However, it expired on December 31, 2013, and it is uncertain whether Congress will enact the provision for 2014 and retroactively reinstate it to January 1, 2014. It will be important to keep an eye on Congress to see if the provision will be reinstated and if so, whether it will have a retroactive effect.
Gifting is a commonly employed strategy to reduce the size of one’s estate. In 2014, the annual gift exclusion is $14,000. This means that you can transfer $14,000 to an unlimited number of individuals during the calendar year without needing to file a gift tax return with the IRS. For married couples that want to gift jointly owned property, each spouse is entitled to the annual exclusion amount on the gift. This means that for 2014, a married couple may gift $28,000 to a single donee. The annual exclusion will remain at $14,000 for 2015.
- Estate tax returns
For decedents dying in 2014, the Maryland estate tax exemption is One Million Dollars. This means that if the gross estate is equal to or greater than $1,000,000, a Maryland resident, or a nonresident with real or tangible property in Maryland, must file a Maryland Estate Tax return within 9 months of the decedent’s date of death unless an extension is granted by the Comptroller’s office. Penalties and interest may be imposed for filing a late return.
The Maryland estate tax exemption amount will increase to $1,500,000 on January 1, 2015. So, for a decedent dying on or after January 1, 2015, the Maryland estate tax return will only need to be filed if the gross estate is equal to or greater than $1,500,000.
In light of the recently changed Maryland estate tax laws, it is important to have the tax planning in your documents reviewed to ensure the wealth you have accumulated is protected and preserved for your loved ones.
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