Q:

Hello, I saw your website and was hoping you may be able to tell me what the allowable tax free gift amount is for 2005? Has it increased from the $11,000 in 2004 to $12,000 for 2005?

Thank you kindly,

A:

The annual exclusion is still $11,000 for 2005.

Unlike some tax items that are adjusted each year in small increments to account for the inflation rate, this is only allowed by law to be adjusted in $1,000 increments when the cumulative CPI change since the previous increase warrants it.  This means it may be another few years before another hike is required.

You can see more on this at the IRS’s website.

Kerry Kerstetter

CBO Forecast Shows Runaway Spending—Not Tax Cuts—Causing Deficits – Why it always makes me sick when the media and their Fellow Travelers just readily accept the premise that Bush’s tax cuts created or worsened the deficit.  As was the case after the Reagan cuts of the 1980s, the rate cuts resulted in increased revenue and prevented the deficit from being even worse than it would have been. The drunken sailors in DC need to be stopped in their wild reckless spending sprees if there is any hope of ever seeing anything resembling a balanced budget again.

It has been no secret that one of the issues that I have long felt strongly about is the Social Security Ponzi Scheme.  Ever since we analyzed its financial criteria in my very first college accounting class in 1973, I have understood what a sham it is for most people.  We compared it analytically with other similar programs, such as private annuities and life insurance policies, and found it was far worse from an investment perspective than any of the other options.  That was almost 32 years ago, and it has become even worse since then.

For the past several months, one of the best places to find articles and links to news coverage of the Social Security mess has been at the Club For Growth’s blog.  I make a point to check it every day, as well as subscribe to their RSS feed via my Bloglines account.  As the volume of information on this important topic has exploded, with so many outright lies, the Club has established a blog style web site, Social Security Choice, devoted exclusively to discussing the Social Security system from a free market capitalist approach. 

Andy Roth of the Club has done an outstanding job, in a very short time (I just heard about it last Friday), of assembling an interesting mix of people, including a certain opinionated CPA, to write on this topic from our various perspectives.  As I do in my own blog, I intend to address the Social Security issues from the viewpoint of a real world tax practitioner and from how they affect my clients, readers, and seminar attendees in regard to the payment in of the SS taxes, as well as the maximization of the benefits; all very important issues that I have been dealing with for 30 years now, and continue to do on a daily basis.

I do feel very honored to have been invited to join this esteemed group to contribute to the capitalist side of the debate on improving the Social Security system.  It will be an uphill battle getting the capitalist message out to counter the wider coverage that the liberal media have.  However, as was proven during the elections last November, the new media outlets, such as blogs and talk radio, can overcome the lies and Socialist agenda of the conventional media.

To avoid unnecessary repetition, I will only be posting my thoughts, as well as comics, on the SS issue on this new blog and will continue adding other tax and financial items here on my personal blog.  I suggest that you bookmark this new site, and/or add its RSS feed to your reader in order to keep up with the truth on this very important issue.  I have also added a link to it on the very top of my blogroll on the right side of this page. 

The volume of lies and distortions will only get larger in the coming months, as this matter works its way through the legislative/digestive process that our rulers in DC use; so having at least one source that you can trust for accurate information should help us all be better informed and ready to recognize the lies that will continue to pile up from the Left.

‘Survivor’ Winner Arraigned on Tax Evasion – The latest on someone who portrays himself as being so smart, yet is really so stupid.  All of the stories I have seen on this “accidental oversight” of over a million dollars of income give the impression that Hatch prepared his own tax returns.  This is actually a positive angle to the story; because I would hate to think that there was a professional tax preparer who would be so stupid and oblivious that s/he would fail to include this income that everyone in the country knew about.   

Deficit-Minded Republicans Eyeing Entitlements – Will wonders never cease? Another story about GOP rulers wanting to limit government spending.

Some folks have more creative options for dealing with tax collectors than do the rest of us.