People who want to give a large amount of money to another person often have questions about how much they can give without having to pay taxes on the gift. Fortunately, the gift tax is relatively simple once you know the basics.
Many parents find themselves in a position where they want to give a large sum of money to an adult child in need. They often wonder if they can do so without having to pay tax on the gifts.
One such parent recently wrote to Money and asked if he could give $15,000 to a child to pay off the child's debt.
The answer, given in a Money article titled "When Does a Gift Trigger a Tax Bill?," contains a good explanation of the basics of the gift tax.
As the article explains, you can give up to $14,000 a year to any one individual without triggering the gift tax. You must report those gifts of more than$14,000 in a gift tax return, but taxes won't be due unless you exceed $5.43 million in total gifts during your lifetime.
For married couples those numbers are doubled.
It is important to note that more can be given to pay tuition or medical expenses as long as gifts are made directly to the institutions. Gifts for those purposes made properly are always tax-free.
If you need to give more than that to a child, you might be able to if your child is married. You can give $14,000 to your child and up to another $14,000 to your child's spouse.
If you have other questions about the gift tax or want to know how making gifts can be integrated into your estate plan, please contact my office to arrange for a consultation.
Reference: Money (May 5, 2015) "When Does a Gift Trigger a Tax Bill?"
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