What does GSTT mean in TAX
GSTT (Generation Skipping Transfer Tax) is a federal tax that is applied to gifts and inheritances that are made to individuals who are more than one generation younger than the donor. The GSTT is intended to prevent the avoidance of estate taxes by transferring assets to younger generations.
GSTT meaning in Tax in Business
GSTT mostly used in an acronym Tax in Category Business that means Generation Skipping Transfer Tax
Shorthand: GSTT,
Full Form: Generation Skipping Transfer Tax
For more information of "Generation Skipping Transfer Tax", see the section below.
How GSTT Works
The GSTT is imposed on the value of the gift or inheritance that is transferred to a younger generation. The tax rate is 55% for transfers to individuals who are two or more generations younger than the donor, and 35% for transfers to individuals who are one generation younger than the donor.
Exemptions and Exclusions
There are a number of exemptions and exclusions that can reduce or eliminate the GSTT. These include:
- The annual gift tax exclusion of $16,000 per donor per recipient
- The lifetime gift tax exemption of $12.92 million per person
- Transfers to spouses
- Transfers to charitable organizations
- Transfers of certain educational and medical expenses
Essential Questions and Answers on Generation Skipping Transfer Tax in "BUSINESS»TAX"
What is GSTT?
The Generation-Skipping Transfer Tax (GSTT) is a tax imposed on certain transfers of property to persons who are two or more generations below the transferor. The GSTT is designed to prevent the avoidance of estate taxes by transferring property to younger generations.
What types of transfers are subject to GSTT?
GSTT applies to transfers of property that are made:
- Directly to a person who is two or more generations below the transferor
- To a trust that is expected to distribute property to a person who is two or more generations below the transferor
- To a person who is not a lineal descendant of the transferor and who is more than 37.5 years younger than the transferor
What is the GSTT rate?
The GSTT rate is 40%.
How can I avoid GSTT?
There are several ways to avoid GSTT, including:
- Making transfers to lineal descendants
- Making transfers to trusts that are not expected to distribute property to persons who are two or more generations below the transferor
- Making transfers to persons who are not more than 37.5 years younger than the transferor
What are the consequences of not paying GSTT?
If you fail to pay GSTT, you may be subject to penalties and interest. You may also be required to pay the tax plus interest from the date the tax was due.
How can I get help with GSTT?
You can get help with GSTT by contacting the Internal Revenue Service (IRS). The IRS has a number of resources available to help you understand GSTT, including publications, forms, and online tools. You can also get help from a tax professional.
Final Words: The GSTT is a complex tax that can have a significant impact on estate planning. It is important to consult with a tax professional to determine how the GSTT might apply to your specific situation.