Can you answer some gift tax questions?
Asked by
JLeslie (
65790
)
February 29th, 2012
I live in America and I know money gifts can be given tax exempt up to I think $12k a year by an individual. But, what I was just told to me is gifts can actually be given in almost any sum without taxation, as long as it is under $1million, and it is counted towards the lifetime exemption of $1million. Is that true? Then at the time of death, any money would then be taxed over the $1million.
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7 Answers
“The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.
1. Gifts that are not more than the annual exclusion for the calendar year.
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002–2005, $12,000 in 2006–2008, and $13,000 on or after January 1, 2009, the annual exclusion applies to each gift.
What if my spouse and I want to give away property that we own together?
You are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002–2005) or $24,000 (2006–2008), $26,000 (effective on or after January 1, 2009).”
IRS
@marinelife I had tried to find the info on the IRS site, but did not come across it. Did I miss something? Did you happen to see where it might talk about lifetime gifts against estate taxes? The annual exclusions you quoted above would be money above the estate tax that can be given away annually.
From Reuters:
“The big news for estate planners in the U.S. tax legislation passed last year isn’t the $5 million estate-tax exemption—though that number is far higher than expected—it’s the $5 million lifetime gift-tax exclusion.”
Oh, interesting! $5million now. I need to read up some more on how this works. Hope we get some additional answers.
You can give gifts greater than the individual exclusion limit and file a gift tax return and the gift reduces your estate tax exemption. So if you gave someone $50,000, filed the gift tax return, reduced your estate exemption, you’re cool.
No. There is a difference in gift and estate tax. The annual exclusion amount of $13,000 applies to gifts given within a calendar year to one person. The person who gave you information is confusing two different kinds of taxes. The IRS website has all of the answers.
http://www.irs.gov/businesses/small/article/0,,id=98968,00.html
@MollyMcGuire We have already looked at the IRS website on this Q. Are you saying money can not be given anytime, even before a person dies, going towards the lifetime allotted amount? I understand that gift tax is over and above this amount, that someone can gift $12k a year and it doesn’t take away from the amount allowed for the estate.
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