FPA of New York: Common Questions Surrounding Tax Deductions

NEW YORK - April 26, 2016 - PRLog -- Tax season brings with it a litany of questions, and perhaps the one most often explored is: Is this tax deductible?  While a CFP will know for sure if a particular purchase or expense can be deducted from your taxes, it is best not to make assumptions on your own based on wishful thinking.  Still, there is no reason why you should miss out on any tax breaks you are entitled to.

That is why Asset TV invited Valerie Adelman, Principal of Financial Asset Management Corp. and Certified Financial Planner, to sit down with Courtney Woodworth and answer once and for all some of the most common questions she hears from her clients about what you can and can't deduct from your taxes.

The first question Valerie addresses is whether or not you can get a tax deduction for making a gift.  Valerie states that, "People are under the assumption that they get some kind of benefit when they give a gift, but they don't."  In fact, there is nothing that is tax deductible about making a gift.  The opposite side to this question, which is also commonly asked, is whether or not any gift received is considered taxable income.    As Valerie explains, "There is actually an exclusion this year of $14,000.  If one person makes a gift to another person, nothing happens. There is no tax consequence one way or the other."  For gifts that are over $14,000 there is just one stipulation.  "[The giver] must file a gift tax return.  And in fact, they can make a gift of a million dollars and there would be no tax to pay because it's part of our unified credit that's part of estate planning…The person who receives the gift, receives it tax free and also does nothing."

The second question Valerie addresses is whether or not individuals need to pay tax on an inheritance.  Much like a gift, an inheritance in the federal law is tax-free.  However, depending on the state in which the individual lives, he or she may have to pay an inheritance tax to the state. "In New York there is no inheritance tax; there's an estate tax," Valerie explains.  "But in the state of New Jersey for example, there is an inheritance tax.  So while on the federal level there is no tax to pay, you do need to check with your state laws to see whether you pay tax on that or not."

Finally, another common inquiry and point of contention among many is the length of time you should keep your tax records.  Valerie states that the IRS generally audits people going back three years.  However, for people who did not report income, the IRS can go back six years, while people who submitted a fraudulent claim have no time cut-off whatsoever.  So for most people, the general rule of thumb is about seven years.  But for any records that have to do with cost basis, such as a house or investments, the records need to be kept for three or seven years after they are sold.

To watch this interview and to find out more information about what can and can't be deducted from your taxes, tune into Asset TV:  http://bit.ly/21eFiL8


About

Asset TV is the investment professional video platform for research and education.

Over 2,500 video reports are available to watch on-demand, currently accessed by a global audience of 400,000 Financial Advisors, Institutions, Consultants, Plan Sponsors, Endowments & Foundations, and Wealth Professionals.

Asset TV is used as a valuable source of Continuing Education - viewers can register for free and access their own video history for CE credits including accreditation from the CFP Board, IMCA and CFA Institute.

Asset TV is a founding partner of the Bloomberg terminal video service, extending the reach of content to a global audience of 350,000+ institutions.

For more information, visit Assettv.com.