However, if you withdraw money from the plan for a purpose other than eligible college expenses, you will be subject to federal income tax and an additional 10% federal tax penalty on earnings.
When she takes money out in retirement, it will be subject to federal income tax.
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Transfers of property in exchange for nothing (or less than full value) are subject to federal gift tax if they exceed the annual exclusion.
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Since taxable withdrawals are included in your adjusted gross income, they can raise the percentage of your Social Security that is subject to federal income tax.
In addition, individuals who die and are subject to federal estate tax can obtain an automatic payment plan to the extent that the tax is attributable to actively managed real estate businesses.
Gifts in excess of the annual exclusion are subject to the federal gift tax.
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Below are five strategies that can continue to help mitigate, or even eliminate, being subject to the federal estate tax.
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What is in question, however, is whether those donations should be subject to the federal gift tax (currently sitting at 35%).
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The IRS has taken the position for the last thirty years that those transfers are, in fact, subject to the federal gift tax.
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Did you know that many items are subject to the federal estate tax even if the decedent never had a chance to enjoy them?
It is subject to the federal corporate profits tax on any profits that it makes.
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Depending on where you live and whether you are subject to the federal alternative minimum tax (which determines whether you bear the full brunt of your state tax bill or can share it with Uncle Sam), the state tax penalty could easily be worth 35 to 50 basis points.
The tax deferral strategy pays off faster if your capital gains are subject to state income tax as well as federal tax, Thomas notes.
The genuine outrage is that Apple's profits in the U.S. are subject to a combined state and federal statutory tax rate of 39.1% that is the developed world's highest.
For 2013, for high-earners who are subject to the new 39.6% top federal income tax rate, the benefit is even greater.
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Maybe you are subject to the alternative minimum tax, or AMT, a system that limits your federal deductions, if you make over a certain amount.
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