Gift tax exclusion increases to $15,000 in 2018

The annual exclusion for gifts increases in 2018. An individual can give up to $15,000 per person per year without incurring a gift tax. This is up from $14,000 in 2017.

An individual who gives away more than $15,000 in a year to a single recipient is subject to the gift tax on the amount that exceeds $15,000.

The gift tax is owed by the giver of the gift, not the recipient. Recipients generally never owe income tax on gifts of any amount.

Review Your Tax Return Before Signing

After your tax preparer completes your tax return, review it before you sign it. Ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. You should also make sure that your refund goes directly to you – review the routing and bank account numbers on the completed return.

Are damages taxable? It depends on the type of award.

● Recovery for lost wages or lost profits are taxable (because they are replacing taxable income).

● Breach of contract awards are taxable (because it's generally a loss of income)

● Personal injury awards are NOT taxable.

● Emotional distress awards are taxable (unless they arise from personal injuries).

● Medical expense awards are NOT taxable (as long as you did not take an itemized deduction for medical expenses related to the injury or sickness in a prior year)

● A payment for damaged or destroyed property is taxed as a capital gain if the money received exceeds the property’s cost (or "basis").

● The recovery of an expense is NOT income (unless the expense was deducted in a prior year, this is known as the "tax benefit rule").

● Punitive damages are taxable.

● Pre-judgment interest and post-judgment interest are taxable.