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October Challenge Complete – Bring on the Holidays

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I am excited to say that I have thoroughly and completely tackled my October challenge of Tax Preparation! I have reviewed my filings, updated my estimated tax payments appropriately and really gotten all my paperwork together. Filing my taxes come 2020 is going to be a breeze.

I am feeling very accomplished!

And I have thoroughly enjoyed rubbing all this in my dad’s face. He just filed his 2018 taxes. He ALWAYS files late. And I thoroughly enjoying calling to celebrate when I file my taxes every year while he groans. Family love.

Now I’m ready to focus on the holidays. In fact, I enjoyed some time at our local Harvest Festival this weekend. People are so creative! I was specifically looking for little things for Christmas presents. And I love enjoy supporting small businesses.

We are also looking for some creative gifts we might can make this year as well. Princess has knitted presents the last couple of years, so she is ready for something new. I suggested painting frames. She’s also begun painting iPhone cases. They are beautiful. And she seems to be enjoying it.

I suggested we hit the local thrift store to find some cool stuff to paint. And maybe some of it would become good Christmas gifts. We are especially focusing on our family in Texas so we can take them when we go, in less than a month, rather than having to pay shipping!

I’ve been thinking about doing some soup in the jar type gifts for local friends. I found some really cute ideas online. Pinterest has definitely been my friend lately.

What about you, are you prepping for the holidays? Buying or making presents? Have any unique ideas for homemade gifts?


Things to Know About Inheritance Taxes in the USA

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The saying that you can’t take it all with you when you die is absolutely true. Your earthly possessions remain exactly where someone left them when they pass. However, there’s a slight silver lining to the tragedy of death in the family: inheritance. Depending on the terms of their will, most people will leave things of sentimental and/or monetary value to their descendants to help them with their lives. In the USA, death and taxes aren’t only inevitable. They are intertwined. The United States has several taxes that can apply to inherited assets. Being prepared for these taxes ahead of time can save you a lot of shock when tax season comes.

Here’s what to look out for:

Capital Gains Tax

If an asset you’ve received in inheritance, such as a home, is sold for a higher value than its market value, you must pay capital gains tax on money over the value of the house. For instance, if a $150,000-house is sold for $200,000, capital gains must be paid on the $50,000 made from the sale. Knowing the capital gains tax on selling inherited property is important when budgeting for the future based on the money you’ll make from the sale. Luckily, the value of the house isn’t what the original owner paid but instead, the current market value of the home.

Estate Taxes

Federal estate taxes aren’t much of a worry for the average person seeing as the federal exemption limit is $11.8 million. There’s no estate tax owed if the tax amount is under this. There are, however, 12 states as well as the District of Columbia that do levy estate taxes, and their exemption is typically closer to $1 million than the generous exemption from the federal government. When estate taxes are owed to the state government, the home won’t be released to the person who has inherited it until the taxes have been paid.

Federal Taxes on Inheritance

The federal government concerns itself mainly with any capital gains you stand to acquire. Money that’s inherited isn’t categorized as income. Therefore, as far as the IRS is concerned, the money is tax-free.

State Taxes on Inheritance

Currently, only the states of Kentucky, Iowa, New Jersey, Maryland, Pennsylvania, and Nebraska have a direct inheritance tax, so it’s unlikely you’ll have to pay any state tax on inherited funds as well. Even if you live in one of the six states listed above, if the deceased lived in any of the other 44 states, the money won’t be taxed once it’s transferred to you. In these cases, the funds are considered a gift.

Conclusion

It can seem unfair that even after death, the assets of your loved ones will be subject to federal taxation. But then, the rules currently in place in the USA are rather agreeable compared to some parts of the world, and really, it’s only when someone “profits” from the sale of assets acquired through inheritance that the government wishes to become involved. Essentially, it’s more likely than not that you’ll receive the full dollar value of the estate left to you at time of death. You’ll only have to worry about inheritance-related taxes if you convert any assets into monetary value at a higher price than market value.

For more of our great articles, read these:

Piggy Banks To Teach Your Children About Money

Everydollar versus YNAB Review

Frustrated With Great Lakes

 

Image source: Pexels.


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