Since the first of the year we have heard from a nice number of clients, many with questions about how taxes will change under the new administration. Only time will tell, but there are many potential changes to the tax code that could be coming down the pike. We will explore some of those in future editions of this newsletter.
In the past few weeks I’ve also had a handful (maybe two?) of clients reach out with questions on gifting. So I thought I’d write a quick Gifting 101 CliffsNotes.
Many folks know that there is a $15,000 per person annual exemption. That means anybody can give up to $15,000 to anybody else per year with no taxes on the gift for either side. Know that if you are selling off stocks or funds in a non-IRA account and there are gains, the gift will be subject to capital gains taxes for the gift giver.
As an example, John and Mary are married, have two married kids and four grandkids. Both John and Mary could each gift $15,000 per year to each child, inlaw, and grandchild. All totaled, each could make gifts to eight people at $15,000 per year. Together, that’s an annual gift of $192,000 with no paperwork.
Some folks want to gift more than $15,000 to a person at a particular time. Would taxes be due if you go over $15,000 per year per person? Probably not. Right now there is an $11.7 million lifetime estate and gift tax credit per person. Bottom line: husband and wife together could gift a total of over $23 million with no federal gift or estate tax. Nice!
Just one caveat… if you gift more than $15,000 to any one person during the year, you need to fill out IRS Form 709, keeping your lifetime exemption straight with the IRS.
Confused? My son Jeremy is always available to answer estate planning questions, including those revolving around gifting.
Enjoy Super Bowl Weekend…
Peter