There are very few changes for 2016. After years of uncertainty and a rollercoaster ride, we’ve reached stability. The exclusion changed a whopping 0.4%, from $5.43 million in 2015 to $5.45 million in 2016. That’s a change of only $20,000. Of course, the new exclusion is for estate and gift, as well as GST purposes. The present interest annual exclusion remains unchanged at $14,000.
On the income tax front, the brackets and exemptions changed little, if any.
As I mentioned last week, the early Christmas present from Congress was the passage of permanent Charitable IRA rollover legislation, the Protecting Americans from Tax Hikes (PATH) Act of 2015. With the Charitable Rollover IRA, a taxpayer may make a contribution to a public charity directly from their IRA (or Roth IRA), (but not a 401k or other retirement plan). The taxpayer must be at least age 70 ½ at the date of the contribution. The contribution may not exceed $100,000 and is made directly by the custodian to the charity. As I mentioned last week, this is preferable for a client because they don’t have to itemize deductions, it avoids the haircut on deductions for high-earners, and it doesn’t push taxpayers into higher brackets.
Happy New Year!!
I hope all of you have a wonderful holiday season. If you are travelling to see loved ones, I hope your travels are safe and easy. I hope you all have a great, prosperous 2016 filled with hope and joy!
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
www.aaepa.com
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