How much can I gift to my children legally for income tax purposes?
For income tax purposes, you cannot gift them anything. Gifts have no income tax consequences for either the donor or the donee. There is a Gift Tax, however, and it's levied upon the donor, not the recipient. You may gift up to $13,000 per year per recipient to an unlimited number of recipients with no gift tax filing requirement. If you exceed that to one or more recipients you must file a Gift Tax return. Amounts above the $13k annual exclusion are first used against your lifetime exclusion of $1,000,000. Once that's exhausted, you start paying Gift Tax on all additional gifts for the rest of your life.
by Bostonian In MO - 10 hours ago
FWIW, the reason the $1Million exclusion is an issue is because when you die, the taxable gifts are added back to your estate. At the moment, the estate tax is scheduled to roar back in at $1Million and then a high tax rate. If your assets are such that you won't die and leave more than a Million, make the gift, file the gift tax form and hopefully your children will give you a big kiss, hug and thank you.
by Quick Answers - 10 hours ago
The limit without filing a gift tax return is $13,000 this year - no telling what it might be after this year. You can give them the $30K, just have to file the gift tax return. Unless you've already used up your million dollar exclusion, you wouldn't have to pay a gift tax, just file the form.
by Judy - 10 hours ago
Same as RTFM said, except it is $13k a year per recipient. If you are married, your spouse can also give $13k,meaning you can give each child $26k a calendar year without needing to worry about a gift tax return.
by J-10 - 10 hours ago
There is no gift limit. Anything over $13K per person per year triggers gift tax reporting.
by Woof - 10 hours ago
Remember that your spouse can also give the same amount to your children without tax implications You can find more information on IRS site or talk to your tax advisor http://www.irs.gov/newsroom/article/0,,id=107815,00.html
by reynolds - 10 hours ago
You can give them as much as you want to, but you'll have to report any gifts over $13K on your taxes. You won't need to pay any gift tax, though, unless you've already reached your $1 million lifetime exclusion.
by rtfm - 10 hours ago
There are two levels of exemption from the gift tax. First, transfers of up to (as of 2006) $12,000 per person per year are not subject to the tax. An individual can make gifts up to this amount to as many people as they wish each year. A married couple can pool their individual gift exemptions to make gifts worth up to $24,000 per person per year without incurring any gift tax. Second, there is a credit that essentially negates the tax on gifts until a total of $1,000,000 has been given by one person to another. If an individual or couple makes gifts of more than the limit, gift tax is incurred. The individual or couple has the option of paying the gift taxes that year, or to use some of the "unified credit" that would otherwise reduce the estate tax. In some situations it may be advisable to pay the tax in advance to reduce the size of the estate.
by ? - 10 hours ago
Per Charles Schwab's web site: Gift and estate tax Gift tax. The $1 million lifetime gift tax exemption remains unchanged, as does the annual exclusion amount of $12,000 ($24,000 for spouses splitting gifts). The top gift tax rate drops to 45%. From: http://www.schwab.com/public/schwab/research_strategies/market_insight/financial_goals/tax/taxes_whats_new_for_2007.html -TT
by throaty - 10 hours ago
The current annual exclusion for gifts (actually to avoid gift tax, not income tax) is $12,000 per recipient. If you are married, your spouse and you can combine your exclusion for a total of a $24,000 gift per recipient. Your are right that the annual gift tax exclusion used to be $10,000. But it increased to $11,000 in 2002, and then $12,000 in 2006. You are able to use a separate exclusion for each child. Thus, if you have three children, you can give each child $12,000 per year. You can also use this gift exclusion for unrelated persons. Thus, if your child is married (or in a committed relationship), you can give a gift of up $12,000 to the child’s spouse (or significant other).
by ? - 10 hours ago
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