For some workers this distinction won\’t matter because they don\’t earn more than the $53,400 that is subject to both taxes. But for wage earners in higher income brackets, the Medicare tax will continue long after the Social Security tax is satisfied. Q: In recent columns you have discussed the right of individuals to give others $10,000 annual tax-free gifts and the requirement that banks report cash transactions of $10,000 or more. I don\’t get it. May my wife and I each give our daughter $10,000 from our joint bank account without reporting it to the Internal Revenue Service? And, if so, will this gift trigger a currency transaction report from our child when she deposits the amount in her bank? –A. C. D. A: You have confused two very separate and distinct facts. Yes, a taxpayer may give one or more individuals up to $10,000 apiece every year without reporting the gifts to the IRS. Married couples, as two individuals, may give a total of $20,000 to as many people as they want every year without reporting it to the IRS. The gift tax law allows this.
What form these gifts take is an entirely separate issue. In most cases, these gifts are made in the form of stock, some other tangible asset–or, if it\’s a cash gift, by check. If the gift comes as a check, no report is necessary because the bank has the name and account number of the donor from the check. However, if a $10,000 or $20,000 gift is made in cold cash, the recipient will be required to complete a currency transaction report–and then only if she tries to deposit it in the bank in one lump sum. Q: We are an elderly couple with investments in Series H and HH savings bonds.
The bonds are registered in both our names. When one of us dies, will it be necessary to change the registration on the bonds to redeem them? We hope not because we fear that it would be very difficult. –N. J. L. A: You don\’t necessarily have to register your bonds when one of the co-owners dies, say officials from the Federal Reserve Bank in Los Angeles. However, bank officials highly recommend it and promise that it is quite easy. A key reason for registering the bonds, bank officials say, is allows the surviving spouse to add a new co-owner\’s name on the bonds. Why do this? It will make redeeming the bonds a bit easier and quicker for one of your heirs who may need the proceeds before probate is settled. However, adding a joint tenant to one of your assets could expose that asset to claims from the creditors of that tenant–an undesirable side effect.
How come my paycheck may be less than what I am earning?
People who live and work in the United States are required by the law to report their earnings and pay taxes if their income is above the poverty level. The law also requires most employers to automatically take out your taxes from your paycheck and send them to the government for you. How much you pay depends upon a number of things, including if you have any tax exemptions (such as family members whom you support) and where you live. However, some taxes, such as Social Security and Medicare/Medicaid stay the same. Below is a sample paycheck that explains how taxes are taken out. If you have additional questions about your income, taxes, or rights as an employee,. Next: