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Wes Parker, EA, CAA
AW Parker, P.C.
7990 Trinity Road, Suite 110
Cordova, TN 38018
Phone: 901-794-3528
Fax: 901-794-8354
Email: wes@awparker.com
2021 Tax Planning Guide
Estate Taxes
The estate, gift and generation-skipping tax exemption increased to $11.7 million for individuals in 2021, up from $11.58 million in 2020. Married couples filing jointly qualify for $23.4 million in 2021, up from $23.16 million in 2020.
If you haven’t discussed estate planning opportunities with your legal, tax and financial professionals yet, now is a good time to learn more.
Even with more generous federal estate tax exemptions, taxpayers need to be aware of local estate and inheritance taxes. Although some states have repealed their estate tax statutes and others increased their exemptions recently, a few still have the tax. A handful of states also have an inheritance tax.
GIFT TAXES
The annual gift tax exemption remains $15,000 per donor for each recipient. If, for example, you and your spouse each max out your annual gift exemption to three grandchildren, you will avoid gift tax and preserve your entire estate tax exemption.STEP UP IN BASIS
A new fair market value is established for assets received after a donor’s death — a step up in basis — but there is no step up in basis for gifts received during a donor’s life. The step-up in basis sets a new starting value for inherited assets, which can make a big difference if the assets have appreciated significantly, while making it less likely to trigger larger capital gains tax.Reduce your taxable estate by putting five years’ worth of gifts into a 529 plan for a loved one’s college education. Maximize your gift by giving up to the maximum annual tax-free gift limit of $15,000 each year for five years per donor per recipient; the plan’s assets then grow tax-deferred and qualified withdrawals are tax-free.
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