How much can I gift to my children legally for income tax purposes?

Sharlene: How much can I gift to my children legally for income tax purposes?
Is there a limit to the amount I can give to my children as gifts per year?
I would like to gift $ 30,000 but think that the limit is $ 10,000

Answers and Views:

Answer by rtfm
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.

Answer by Caveat Emptor
There is no gift limit. Anything over $ 13K per person per year triggers gift tax reporting.

Answer by J-10
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.

Answer by popular
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).

Answer by Judy
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.

Answer by throaty
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:

https://www.schwab.com/public/schwab/resource_center/expert_insight

-TT

Answer by Bostonian In MO
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.

Answer by Tanya
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.

Answer by the tax lady
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.

Answer by reynolds
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

Answer by Gaynor
Hi Newbie,

In order to bypass having to file a gift tax return (IRS Form 709) your gifts to each individual must be $ 12,000 or less. If you gift more (unless you meet one or the exceptions) you have to file this very simple form. Note that if you are married both you and your spouse have a $ 12,000 exemption so you can make joint gifts to the same individual of up to $ 24,000.

If your estate is under $ 1,000,000 I would not be too concerned about gifting over the $ 30,000 per child (unless you had 100 children). All it means is that for each individual you gifted over the $ 12,000 limit that amount reduces the amount your estate’s exempt value.

My feeling is, hey, your’e dead. Who gives a crap about estate taxes. You gave your heirs something while you were living. It the IRS takes some of it away after you did so be it. BEGGARS CAN NOT BE CHOOSERS!

Note that there are several exceptions to the $ 12,000 limit and that includes unlimited spousal transfers, gifts of medical care directly to the provider and gifts of tuition and fees paid directly to the college or university. There are more, so be sure to check with a tax professional who specializes in upper income transfers of wealth.

Here is also the IRS FAQs on gift taxes: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes

Best of luck to you and happy holidays!

Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice in this communication, including any attachments or enclosures, was not intended or written to be used, and it cannot be used, by any person or entity for the purpose of avoiding penalties imposed under the Internal Revenue Code.