Gift Giving
Courtesy of IRS
If you gave any one person gifts valued at more than
$11,000, it is necessary to report the total gift
to the Internal Revenue Service. You may even have
to pay tax on the gift.
The person who received your gift does not have to
report the gift to the IRS or pay either gift or
income tax on its value.
You make a gift when you give property, including money,
or the use of or income from property, without expecting
to receive something of equal value in return. If you
sell something at less than its value or make an
interest-free or reduced-interest loan, you may be
making a gift.
There are some exceptions to the tax rules on gifts.
The following gifts do not count against the annual limit:
- Tuition or medical
expenses that you pay directly to an educational
or medical institution for someone's benefit
- Gifts
to your spouse
- Gifts
to a political organization for its use
- Gifts
to charities
If you are married, both you and your spouse can give
separate gifts of up to the annual limit to the same
person without making a taxable gift.
For more information, get:
They are available for downloading (click the names) or
by calling
toll free 1-800-TAX-FORM (1-800-829-3676).
TAXMAMA NOTE....
What IRS didn't say in this little article,
is that you can avoid paying the gift tax by using up a
portion of your estate tax allowances. In other words, if
the non-taxable estate tax limit is $1,500,000 and you give
someone a gift of $50,000 - here's what you would do:
| Total gift: |
$ 50,000 |
deduct The gift tax allowance of |
($11,000) |
| Taxable gift |
$ 39,000 |
Then, deduct this from the $1.5 million -
and that does two things. It makes the $39,000 gift non-taxable, presently.
And it reduces your ultimate non-taxable estate to
$1,461,000...which of course, will change as the estate
tax limits increase...
To take advantage of this, you MUST file the Gift
Tax Return, Form 709.]
