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GIFTS |
 Overview |
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How much can I give away without
incurring a gift tax? |
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Can spouses use two gift tax
exemptions if only one of them pays for the gift? |
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Who files the gift tax return? |
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If a name is added to a joint bank
account, is that a taxable gift? |
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If gifts are made to a trust, how
many exemptions are allowed? |
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OVERVIEW
Oftentimes, in order to reduce estate taxes, it is
prudent to give away your property to the intended
beneficiaries before you die. Not surprisingly, there is
a host of IRS regulations defining what constitutes a
gift, how much can be given away every year without tax
consequences, and how these gifts will effect your
estate's eventual tax liability. In fact, the federal
government levies a tax on certain gifts, and the tax is
paid by the giver. The rate applied for the federal gift
tax is the same as the estate tax.
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HOW
MUCH CAN I GIVE AWAY WITHOUT INCURRING A GIFT TAX?
A giver (often referred to in gift tax laws as the
donor) can make tax free gifts of up to eleven thousand
dollars each to as many individuals in a calendar year
as he or she wishes. This amount is being adjusted for
inflation annually since 1998 and rounded to the next
lowest increment of one thousand dollars.
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CAN
SPOUSES USE TWO GIFT TAX EXEMPTIONS IF ONLY ONE OF THEM
PAYS FOR THE GIFT?
Yes. If the donor is married, and his or her spouse
agrees, the gift can be "split" so that up to two
exemptions of up to eleven thousand dollars each can be
utilized for each gift even if only one of them actually
pays for the gift.
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WHO FILES
THE GIFT TAX RETURN?
It is the responsibility of the donor to file the gift
tax. It must be filed, like your income tax return, on
or before April 15th of the year following the year in
which the gift was made for gifts that either exceed the
annual exclusion amount or for split gifts
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IF A NAME
IS ADDED TO A JOINT BANK ACCOUNT, IS THAT A TAXABLE
GIFT?
If you add the name of someone to a bank account to
which they did not contribute, a completed gift does not
occur for tax purposes until the noncontributing joint
owner withdraws money from the account. |
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IF GIFTS
ARE MADE TO A TRUST, HOW MANY EXEMPTIONS ARE ALLOWED?
When a gift is made to a trust, you are allowed as
many eleven thousand dollar annual exemptions as there
are beneficiaries of the trust. |
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If you would
like more detailed information on gifts and gift tax,
please contact the firm.
That attorneys at Hargrove & Rea, P.C. will be happy to
answer any questions you may
have. |
