please define a "gift splitting"
glossary FAQ: glossary.
Alaina B. From Netherlands
25 December, 2009
the "gift splitting " is A taxation rule that allows a married couple to split a gift's total value between each spouse as if each contributed half of the amount. Gift splitting allows a couple to increase the gift tax exemption amount by combining individual allowances.
For gift splitting to be official, both spouses must agree to the gift and specify the situation when filing taxes. In 2006, the gift tax exemption was set at $12,000 per individual gift annually. Gift splitting allows a couple to donate a total of $24,000 before being taxed on the contribution.
For example, let's say you want to give your child $20,000 to purchase a vehicle. If you make the gift alone, $8,000 ($20,000-$12,000) will be subject to gift taxes. However, if you split the gift with your spouse, with each of you contributing $10,000, both contributions will fall under the $12,000 limit, making the entire gift non-taxable. Visit FOREXYARD
do you know what an "annual equivalent rate" is?
glossary FAQ: glossary.
Zayden J. From United States
01 July, 2009
Interest that is calculated under the assumption that any interest paid is combined with the original balance and the next interest payment will be based on the slightly higher account balance. Overall, this means that interest can be compounded several times in a year depending on the number of times that interest payments are made.
In the United Kingdom, the amount of interest received from savings accounts is listed in AER form.
Calculated as:
Where:
n = number of times a year that interest is paid
r = gross interest rate
For example, a savings account with a quoted interest rate of 10% that pays interest quarterly would have an annual equivalent rate of 10.38%. Investors should be aware that the annual equivalent rate will typically be higher than the actual annual rate calculated without compounding. Visit MB Trading
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