This is a hypothetical situation. I had a dream about coming into a great deal of money unexpectedly and I was not sure what was the right thing to do. For the sake of argument we will assume the money is a gift and is not the source of ill gotten gain or from any illegal or improper source. Is there a legal way to invest this to minimize the chunk that the US government would take out of it for taxes?
2007-09-29 14:34:58 · 6 answers · asked by bcweir 2 in Business & Finance ➔ Personal Finance
Of course its hypothetical. In real life, no one is going to put $1,000,000 in cash in any kind of box.
The legal way to invest it is ANY way you want. US gift taxes are NEVER paid by the recipient. Any gift taxes due from the giver are in no way related to what you do with the money. The giver would be required to file a gift tax return if they gave more than $12,000 to any one person in any one year. There is a credit available to exclude up to $1,000,000 of gifts over the course of their life from gift taxes.
2007-09-29 16:01:50 · answer #1 · answered by STEVEN F 7 · 0⤊ 0⤋
If you are receiving $1 Million why worry about the taxes? Let's say for arguments sake the US government took 50%. That still leaves you with a tidy $500,000 and you don't have to worry that hiding it from the IRS might come back to bite you later on.
There are probably many ways to avoid having the government take a large cut, both legal and 'not so legal'. I personally would try to find the most legitimate way to do so, so I could take whatever was left after the government took their hand out of my pocket and then enjoy it without worry.
One other way, you could donate half of it to me and then the government would only be taxing you on $500K. Just a thought :-)
2007-09-29 21:48:39 · answer #2 · answered by Anonymous · 0⤊ 1⤋
What would I do? Contact a CPA who knows how to find the shelters.
I would max out the 401k at work (which is not much, but, it is something.) Give at least 10% to a worthy non-profit, which reduces the income. Pay off all my debt so I am no longer paying interest on my mtg. Which is a better deal than 'needing' it for the itemized deduction. Start college savings plans for my nieces and nephews. Put a lot in Roth IRA.
Invest in liquid assets that are getting at least 12% return. Live off of that. Since all my debt is paid off, I would have much lower living expenses.
2007-09-29 21:53:46 · answer #3 · answered by glendiva1968 3 · 0⤊ 1⤋
if its from family a gift can be given up to a certain amount tax free....
2007-09-29 21:39:28 · answer #4 · answered by mayhap 2 · 0⤊ 1⤋
Up to a certain amount, I think you can give it to your kids.
2007-09-29 21:44:54 · answer #5 · answered by ccrider 7 · 0⤊ 1⤋
isn't that what "offshore accounts" are for ?
2007-09-29 21:39:05 · answer #6 · answered by Scorpius59 7 · 0⤊ 1⤋