True or false? The U.S. has the highest Estate tax in the world?
False. The U.S. only has the fourth highest estate or inheritance tax rate in the world.
True or false? Estate tax makes up the largest portion of federal tax revenues each year?
False. Less than 1 percent of the tax revenue comes from federal estate tax, so most do not need to concern themselves about the estate tax. Income tax and the planning around income taxes are more relevant to all of us.
True or false? The IRS will email or text you if they have a question about your return.
False. The IRS does not contact taxpayers by email, text messages or social media channels for that matter to request personal or financial information.
True or false? The IRS contacts taxpayers through regular mail delivered if they have a question about your return.
True. The IRS initiates most contact through regular mail delivered by the USPS. However, there are circumstances where the IRS will call or come to a home or business. These circumstances include when a taxpayer has a grossly overdue tax bill, a unfiled (delinquent) tax return or has not made proper employment tax deposits. An IRS employee may also view assets or tour a business as part of a collection investigation, an audit or an ongoing criminal investigation.
True or false? When preparing your personal tax return, you must choose either the standard deduction or itemized deductions?
True. For the 2022 tax year, the Federal standard deduction is $12,950 for married filing separately and single filers, $25,900 for joint filers, and $19,400 for heads of household. You can itemize your deductions if your itemized deductions are greater than your standard deduction.
True or false? Every state has an income tax.
False. 9 states have no income state taxes: Alaska, Florida, Nevada, New Hampshire (there is a 5 percent tax on dividends and interest in excess of $2,400 for individuals and $4,800 for joint filers), South Dakota, Tennessee (there is a limited income tax on certain dividend and interest income), Texas, Washington, and Wyoming.
True or false? There are no legitimate income tax planning strategies.
False. There are a number of legitimate income tax planning strategies you can use to reduce your income tax bill. Here are but a few legitimate income tax planning strategies to consider.
If you would like to talk more about your specific situation or still have New Year’s Resolutions to start your family planning for 2023, contact our team at Borkuslaw Group today and make a live or online appointment!
And something special for those of you who completed your Estate Plan over 3 years ago, or been procrastinating your estate plan, it’s time for an Estate Plan “check-up.” Please click here to access our Estate Planning Check-Up Checklist.
Please note that information contained in this news alert is not and should not be construed as legal advice or opinion nor does this information alert create an attorney-client relationship.