Why Are We Afraid of Gift Tax Returns?

gift-taxGift tax returns are required when your gifts to family members, friends, and other non-qualified charities exceed your annual gift exclusion.  The annual exclusion for both 2014 and 2015 is $14,000.  There are a number of ways to give more by combining spousal gifts and making gifts within a family unit.  Beginning with 2015, the tax on a gift tax is not triggered until your combined lifetime gifts exceed $5.43 million.

So why are people reticent to file the return?  There are three primary reasons:

  1. Alerting the IRS to a gift
  2. A confusion about a penalty or tax if the annual exclusion is greater than the limit
  3. Filing another form.

Let’s consider each of these individually:

  1. Better to alert them now while you know exactly what and how much you gave than shift this to your heirs upon your death.
  2. There is no tax or penalty just because you gave more than $14,000 unless you hit the lifetime limit.  We should all aspire to hit the lifetime limit!
  3. The form can be detailed, but is normally not complex to complete.

So, lets get these filed and make sure the IRS doesn’t make your heirs do so!  Waiting until then could cause problems with your estate planning and cost lots of money.

If you have any questions or concerns regarding gift tax returns, please don’t hesitate to give us a call at 314-993-4285 or email us at office@hkaglobal.com

Affordable Care Act Penalty

Under the Affordable Care Act, there is a requirement to maintain minimum essential coverage. A penalty is imposed if an individual does not maintain the minimum coverage for themselves or any of their dependents for 1 or more months. The penalty is added to an individual’s tax return and accounted for as an additional amount of Federal tax owed.


However, the penalty is treated differently under the Internal Revenue Code than other unpaid taxes. If a taxpayer fails to timely pay the penalty imposed under the Affordable Care Act they will not be subject to any criminal prosecution or penalty with respect to this failure. The use of liens and seizures otherwise authorized for collection of taxes does not apply to this penalty either.

If you have an amount due on your tax return before this penalty would be imposed, you can pay the normal income tax liability and leave the minimum coverage penalty unpaid and you will not be forced to pay it. They may send you threatening letters, but they cannot come after your personal assets or subject your wages to garnishment. Unfortunately, if you are overpaid on your income taxes and owe the penalty, they can reduce your refund by the penalty but not less than zero.

Be aware that the restriction on liens only applies to the filing a notice of federal tax lien, no to the lien itself. A federal tax lien arises automatically whether it is recorded or not. The failure to pay becomes a lien on the taxpayer’s property once assessed, but they cannot enforce that lien. The penalty will accrue interest if it is left unpaid, but once again all a taxpayer will likely receive is a nasty letter stating the balance.

The issue begins once the taxpayer with an unpaid penalty dies. If a taxpayer dies without having paid the penalty then the lien can be enforced upon their estate making the assets in the taxpayer’s estate subject to the penalty and interest that accrued on the balance.

So while you would not be forced to pay the penalty while you are living, your estate would be subject to any outstanding penalty upon your death.

If you have any questions regarding the Affordable Care Act Penalty, please contact us at (314) 993-4285 or office@hkaglobal.com.

Tips for Taxpayers Who Missed the Filing Deadline

The IRS has some advice for taxpayers who missed the tax filing deadline.

– File as soon as possible
. If you owe federal income tax, you should file and pay as soon as you can to minimize any penalty and interest charges. There is no penalty for filing a late return if you are due a refund.

– Penalties and interest may be due.
 If you missed the April 15 deadline, you may have to pay penalties and interest. The IRS may charge penalties for late filing and for late payment. The law generally does not allow a waiver of interest charges. However, the IRS will consider a reduction of these penalties if you can show a reasonable cause for being late.

– E-file is your best option.
 IRS e-file programs are available through Oct. 15. E-file is the easiest, safest and most accurate way to file. With e-file, you will receive confirmation that the IRS has received your tax return. If you e-file and are due a refund, the IRS will normally issue it within 21 days.

– Pay as much as you can. 
If you owe tax but can’t pay it all at once, you should pay as much as you can when you file your tax return. Pay the remaining balance due as soon as possible to minimize penalties and interest charges.

– Installment Agreements are available.
 If you need more time to pay your federal income taxes, you can request a payment agreement with the IRS. Apply online using the IRS Online Payment Agreement Application tool or file Form 9465, Installment Agreement Request.

– Refunds may be waiting.
 If you’re due a refund, you should file as soon as possible to get it. Even if you are not required to file, you may be entitled to a refund. This could apply if you had taxes withheld from your wages, or you qualify for certain tax credits. If you don’t file your return within three years, you could forfeit your right to the refund.


Questions? Give us a call! 314-993-4285


-Taken from IRS.gov