Estate Planning

What gifts can I make without having to pay gift taxes?

By David M. Goldman

You can give any person $12,000 a year without any gift tax consequences. This annual gift exclusion is now indexed for inflation and be increasing periodically in $1,000 increments.

If you are married, you and your spouse can each give $12,000 a year for a total of $24,000. If the person you are giving to is married, you can give $12,000 to that person and their spouse.

You may also pay tuition or medical payments on behalf of another, but it is important to make those payments directly to the institution and not give the money to the individual to make the payments. When the payments are made directly they do no count against the $12,000 gift exclusion.

If you want to make a gift that is larger than the $12,000 limit you can also use part of your $1,000,000 lifetime exemption. This exemption is an amount that each person can give away during their lifetime without having to pay gift taxes.

If you do give away more than $12,000 to any individual not including payments for tuition or medical expenses that are made directly, you need to file a gift tax return by April 15th of the following year.

Once you have give away more than the $1,000,000 lifetime limit, you must start paying gift taxes. These gifts are currently taxed at a rate of 45%

Before making large gifts, you should take with your tax professional or your Florida Estate Planning Lawyer.

Full post as published by Florida Estate Planning Lawyer Blog on May 01, 2008 (boomark / email).