Clarifying the 'tax-free' nature of gifts
Q: In your column of Feb. 25, you stated that "donors are allowed to give [gifts] up to $11,000 tax-free." Tax-free to whom? As you mention, the recipient pays no tax. Can it be that the $11,000 is totally tax-free? Can the donor deduct the gift from his or her income?
B.P., via e-mail
A: Gifts of up to $11,000 are totally tax-free to both the donor and the recipient, "without any gift- or estate-tax repercussions," says a spokesman for the IRS. Alas, you cannot deduct the gift from your income. There is one exception: If you give a gift from income to a legitimate charity recognized by the IRS - what the government calls a 501-C-3 charity - the gift to the charity is tax deductible. You will find instructions for charitable deductions in the basic 1040 tax booklets, the IRS agent notes. You can also go to www.irs.gov for additional information.
Q: I am interested in learning more about Franklin-Templeton tax-deductible mutual funds. How do I go about finding out about them?
E.H., Laguna Hills, Calif.
A: Call Franklin-Templeton, at 800-342-5236. The mutual-fund group has both equity and bond products that carry tax-deductible status of one type or another, such as funds that are part of tax-deferred retirement plans or IRAs, or have special deductibility status based on the composition of the portfolio. According to a spokesman, some 34 Franklin bond funds have national, state, or local tax-deductibility, depending where the investor who buys them resides. Many other mutual-fund firms, of course, offer such tax-deductible products as well.
Q: The Work & Money section recently recommended that a person should check his or her credit reports annually. But where does one go to do this?
A.M., Longview, Wash.
A: Contact any one (or all three) of the national credit-reporting agencies. They are: Experian, at 888-397-3742, or online at www.experian.com; Equifax, 800-685-1111, www.equifax.com; and TransUnion, 800-888-4213, www.tuc.com. Credit reports are generally free if you have been recently denied credit, are planning to apply for a job within the next 60 days, are on public assistance, or believe that your credit reports contain fraudulent information. Otherwise, you will usually have to pay a small fee.