IRS gifting maximum per year

[teriwtt]

<p>Quick question. What is the maximum you can gift your children each year without them having to pay taxes? I thought it was $10,000 but someone else told me $12,000. If it’s the higher amount I need to take care of the difference by tomorrow. </p>

<p>Thanks.</p>

[2VU0609]

<p>[Frequently</a> Asked Questions on Gift Taxes](<a href=“http://www.irs.gov/businesses/small/article/0,,id=108139,00.html]Frequently”>http://www.irs.gov/businesses/small/article/0,,id=108139,00.html)
Be ready to write even bigger checks!</p>

[Classof2015]

<p>A smart friend told me that in some states, there’s no “gift tax” maximum on funds used for education, so if the gift was going toward actual tuition, it would not be subject to the IRS rules on regular gifts.</p>

[teriwtt]

<p>It would not be used toward education. This is for a 24 year old out of college.</p>

[teriwtt]

<p>2VU0609 - part of the reason I’m posting here is that today I have minimal access to the Internet other than my iPhone which makes it somewhat difficult to read websites. But what I could manage to read from your link is that it is currently $13,000 a year now. Is this correct?</p>

[jingle]

<p>Yes, it’s $13000. Also, if you are married, you and your spouse can each give the maximum gift to your child, thus doubling the size of the gift–and if the kid is married, you can quadruple it (you and spouse each give max to kid and spouse.) Not that most of us have that kind of money to give away :-).</p>

[MidwestPop]

<p>Yes, you can give $13,000 each per year without it going towards your current lifetime gifting exemption of $5,000,000 per person. If you gift in excess of $13,000 to one person, the excess is used to reduce your $5,000,000 exemption</p>

[Christian2]

<p>Gift tax is pay by the giver, not the recepient. $13,000 can be given by you to any person per year without doing any reporting nor keeping any record. You can actually give more than $13,000 per year and as long as it is under the lifetime exclusion you still do not need to pay any gift tax. All you need is to file a form with IRS to document that giving. MidwestPop gave a very good answer. I just happen to crosspost with him.</p>

[2VU0609]

<p>The above posts by jingle, MidwestPop, & Christian2 are correct. The reason you have $10,000 in your mind is that it was $10, 000 per year for a long period, about the same length of time that IRA contributions were limited to $2000 per year (about 20 years as I remember).</p>

[BunsenBurner]

<p>Just to clear some confusion - tuition and medical expenses are NOT subject to gift tax.</p>

<p>[Frequently</a> Asked Questions on Gift Taxes](<a href=“http://www.irs.gov/businesses/small/article/0,,id=108139,00.html]Frequently”>http://www.irs.gov/businesses/small/article/0,,id=108139,00.html)</p>

<p>

What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return.</p>

<p>What can be excluded from gifts?
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.</p>

<p>Gifts that are not more than the annual exclusion for the calendar year.
Tuition or medical expenses you pay for someone (the educational and medical exclusions).
Gifts to your spouse.
Gifts to a political organization for its use.
In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.</p>

<p>May I deduct gifts on my income tax return?
Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions). If you are not sure whether the gift tax or the estate tax applies to your situation, refer to Publication 950, Introduction to Estate and Gift Taxes.</p>

<p>How many annual exclusions are available?
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, and $13,000 on or after January 1, 2009, the annual exclusion applies to each gift.</p>

<p>What if my spouse and I want to give away property that we own together?
You are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (effective on or after January 1, 2009).</p>

<p>What other information do I need to include with the return?
Refer to Form 709 (PDF), 709 Instructions and Publication 950. Among other items listed:</p>

<p>Copies of appraisals.
Copies of relevant documents regarding the transfer.
Documentation of any unusual items shown on the return (partially-gifted assets, other items relevant to the transfer(s)).
What is “Fair Market Value?”
Fair Market Value is defined as: “The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent’s gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.” Regulation §20.2031-1.</p>

<p>…

</p>

<p>Christian and MidwestPop are correct.</p>

[Iglooo]

<p>Has the lifetime limit jump from $1M to $5M in the new tax law?</p>

[dadx]

<p>Yes, the exclusion has been changed to $5M. How long it will remain there is anyone’s guess.</p>

[cottonwood513]

<p>If you are short of recipients, I’m available. Start early for 2011.</p>

<p>Happy New Year</p>

[Iglooo]

<p>Ha Ha cottonwood. I’ll put my name in the hat, too. If this limit stays, it will put trust industry partially out of business.</p>