A Breakdown On The Gift Tax

A Breakdown On The Gift Tax Sometimes money is the right gift – elderly relatives might give young families or struggling students monetary presents, or maybe family members that are well off decide to help fiscally struggling relatives. No matter what the reason when giving large sums it is important to make note understand the legalities involved.

You may give money to anyone, regardless of their blood relation to you, and not owe taxes, not have to file a gift tax return, and not have lifetime credit applied.

Legally speaking a gift is something that you do not expect to get back and is something that you have no say in whatsoever. This means that you cannot give property with the rule that it must be returned in five years, or give money to a couple and say it must only be used for house repair. There must be no legal requirements, restrictions, or delays on the gift’s use by the donator.

As of 2014, a person could legally pass on $14,000 to another person without taxes being paid on the sum. The amount is to be given during one year, so $14,000 annually per person. This amount or anything less is under exemption, but anything more will be subjected to taxation. If you give more you will have to file a gift tax return.

Parker Writing Set When giving a monetary gift spouses can each give money. This means that if you decide to give a child the maximum available, and so does your spouse, that means that together you can give each of your children $26,000 per year.

Not only do amounts over $14,000 have the potential to be taxed, but following the gift tax you may face the lifetime gift tax credit. The lifetime gift tax credit can exclude taxes of up to $1 million but it will lower the estate tax credit available to you.

When placing a gift in a trust it is, generally, not accepted for exemption because being in trust places restrictions and delays on the gift. However, by adding a Crummey power, which is a legal move allowing the person to request the gift be withdrawn from trust sooner than legally allowed. This law is subjective to congress and creations of trusts and donations made to them should be more thoroughly researched before being executed.

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8 Responses to “A Breakdown On The Gift Tax”

Did anyone ever tell you to keep your comments to yourself? That wasn't me! I LOVE to hear from you. Thank you so much for visiting!

  • Francy:

    Hmmm, very interesting… a person could legally pass on $14,000 to another person, together you can give each of your children $26,000 per year. not $28,000.

  • Jew:

    Money is great as a present. no one is going to turn it down and they can buy whatever they like, it’s my opinion

  • Gagnors:

    $$$$$$$$$$$$$ ALWAYS WORKS!

  • Brow:

    the good idea is giving a gift credit card. the recepient can choose the gift personally

    • Velvet:

      I think giving money as a gift is lazy

      • Diana:

        I hate how people automatically think that giving money as a gift is lazy or unrefined

    • Kiki:

      Brows and Diana, all right!! the most of my friend are into video games, computer related stuff and such.. It is hard to decide what to get them, because I don’t know exactly what they want… a computer game? a console game? a tech gadget? or shampoo? they just tell me “just get me anything”. im at the parting of the ways!

      • Alonzo:

        “just get me anything”… it’s possible that they have everything

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