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Jewish World Review March 20, 2000 / 13 Adar II, 5760

Bruce Williams

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Tax on foreign gifts?


http://www.jewishworldreview.com -- DEAR BRUCE: My father-in-law would like to give my wife and me a sizable gift -- between $50,000 and $100,000. We know about the $10,000 gift rule, but my father-in-law is a foreign national who lives in his home country. Will this gift be subject to a tax? -- P.L. (e-mail)

DEAR P.L.: Money that comes to a United States citizen from out of the country, regardless of the amount, would be considered taxable income by the IRS unless the recipient of that money can establish that it is intended to be a gift.

You would have to provide the IRS with proof, such as a letter from your father-in-law stating that this money was a gift. While the amount is not taxable itself, the interest that this gift earns will be.

DEAR BRUCE: I am 64 and will retire in April 2000, but I have not yet set up IRAs for myself and my wife. With retirement this close, is a non-deductible IRA a good idea? -- P.L., Manhattan, Kan.

DEAR P.L.: It all depends upon your needs. If you are able to remove $2,000 each from your savings into an IRA, you can still pick up another seven years of tax deferment, which has to work to your advantage. If, on the other hand, you require the income from these funds on a regular basis then the IRA is not a viable option for you.

DEAR BRUCE: My husband and I, who are both in our early 40s, just received a $10,000 inheritance. We gross $55,000 a year and have accumulated credit-card debts of $14,000 and school loans of $30,000. Our take-home pay barely covers our monthly expenses.

I am looking for a part-time job to supplement our income, while teaching school full time. What would be the best thing to do with the $10,000? -- S.G., Illinois

DEAR S.G.: In my opinion you have a lot of choices, none of them desirable.

I would reduce the credit-card debt. Even if you are currently getting a decent rate, that can't go on forever. Furthermore, paying interest on the type of things we buy on credit cards over a period of years makes no sense.

Why you can't get along on your current income is another story. There are many families of four that are living comfortably on $55,000 a year. Be that as it may, you might find it helpful to sit down with your spouse and your children and write down every expenditure that is paid out of your pockets every month and then go over a budget. I am sure that you will find some leaks that could be plugged up.



Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).

Up

03/16/00: How to buy government bonds
03/13/00: Buying treasury instruments
03/09/00: Subcontractors must pay S.S.
03/08/00: Real-estate lawyers are essential
03/07/00: Don't expect compensation for ideas
03/06/00: Too rich for a Roth IRA?
03/01/00: Is time-sharing a scam?
02/29/00: Paying for nursing-home care
02/28/00: Rely on a real-estate lawyer
02/23/00: Keeping child's money safe from divorce
02/16/00: Just how important is a 401(k)?
02/14/00: Shaky partnership buying house
02/11/00: Protection by residential zoning
02/09/00: Benefiting from a reverse mortgage
02/07/00: Ensure your insurability
02/04/00: Absurd community zoning laws
02/02/00: Money or securities?
02/01/00: Can we KO a custodian?
01/31/00: Why sell a home you love?
01/26/00: Everyone needs a will
01/25/00: Will splitting stocks affect rollover?
01/24/00: Should early retirees contribute to SEP?
01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
01/13/00: Who gets the house?
01/11/00: It all depends on size of estate
01/06/00: Check references before hiring an advisor
01/04/00: Savings bonds a bad investment
12/31/99: Out of state ain't that great
12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
12/23/99: Options good only when company's strong
12/20/99: Capital gains tax sometimes best
12/17/99: Don't give up your nest egg
12/15/99: Small-claims court no panacea
12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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