Did you know that the gift bags (aka “swag bags”) celebrities received at this years Academy Awards were valued at more than $47,000? Some of the goodies found inside were thousands of dollars worth of weight loss retreat programs, passes to worldwide VIP nightclubs, expensive hand creams and water filtration devices to name a few. However, these lavish gifts were not really free. The price these celebrities will have to pay comes in the form of a hefty tax bill to Uncle Sam. Each Hollywood star will be required to report the value of these swag bags on his or her federal income tax return for income tax purposes. An estimated calculation at the 2013 top individual tax rate of 39.6 percent means each bag will produce a tax bill of just under $19,000.
Unfortunately, the IRS not only wants a cut out of your ordinary income during your working life, but also wants a cut out of what you own after you die. In the world of estate planning, you basically leave behind your very own swag bag of goodies to your loved ones in the form of assets. These may include your house, car, and cash to name a few. Your beneficiaries may be subjected to another type of tax called the death tax.
An estate valued over $5.12 million becomes a taxable estate which is taxed a top rate of 35%. The tax bill can become astronomical and a huge burden on your loved ones. However, with proper and strategic estate planning from your South Florida estate planning attorney, you can mitigate this burden. The stars try to avoid paying the tax by giving away their swag bags to a qualified charity and claim a tax deduction. Learn about the various options available in estate planning so that you can preserve your wealth and protect your assets.
For more information on how to plan for you business’ future, contact our South Florida law firm of Wild, Felice & Partners, PA for a free consultation at (954) 944-2855.
It’s a Wild world. Are you protected?SM