Tag: Income Taxation

Caution on Interest Free Demand Loans to Family Members

When a person makes a loan to a family member, friend or relative at less than the market rate of interest, there may be adverse tax consequences. There are two tax implications to consider: income tax and gift tax. Even though the loan is interest free or carries a very low rate of interest, you… Read More

Deductions for Year-end Charitable Giving

We make a living by what we get, but we make a life by what we give. — Winston Churchill Don’t miss out on making charitable gifts before year-end to get the federal tax rewards that are available. While we still face uncertainty about the income tax rates in 2010 and while I want to… Read More

Get Your GRATs Now!

A Grantor Retained Annuity Trust (GRAT) is an estate planning technique particularly attractive in a low interest rate environment such as we are experiencing. It allows an individual to make large gifts without paying gift tax or using any unified credit. Many families have used short-term GRATs to shift appreciation to beneficiaries with no estate… Read More

New Tax-Free Exchange for Long Term Care Insurance

Starting January 1, 2010, there are two important tax changes regarding Long Term Care: 1) distributions from life insurance policies and annuities which have long-term care features are tax-free when used to pay long-term care costs, and 2) both life insurance and annuities can be exchanged tax-free for tax qualified long term care insurance. If… Read More

Interest Rates on Loans to Relatives and Friends

Many loans among family members are interest free. Be careful. If you loan money to a relative or friend, there may be income and/or gift tax consequences if there is no interest or if the interest is below the market rate. For loans of $10,000 or less, you don’t have to worry about any of… Read More