Today TaxMama hears from Tom in Arizona who asks “If I win the lottery, to how many people can I give a one-time, $1 million lifetime exclusion?”
Naturally, you can start with me!
Seriously though. You have ONE lifetime exclusion from gift taxes worth $1,000,000. Period. It’s not one per person to whom you give a gift.
If you’re married, your wife has one also. As a couple that gives you a total of $2,000,000.
It’s not actually an exclusion. It’s a credit against the total gift tax. Read more in IRS Publication 950, Chapter Two – Gift Taxes
From then on, anytime you give anyone gifts or money of $12,000 or more (adjusted for inflation), YOU will have to pay gift taxes on your gifts.
Of course, if you do some planning before cashing in the ticket and notifying authorities, there are ways to get around this. Once the winnings are in your name(s), it’s too late.
Oh yes, and be sure to request anonymity if you want to keep your money and not be bombarded with thousands of new ‘best friends’ and ‘devoted family members’.
And remember, you can find answers to all kinds of questions about gifts and windfalls and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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- IRS Publication 950 :: Chapter 2 – Gift Taxes