What Is Gift Tax? | Who Pays? | Molen & Associates |

Stay Ahead of Law Changes & Protect Yourself Against Being Audited: Corporate Transparency Act and Reasonable Compensation

What Is Gift Tax?

Since we’re in the season of giving and we so love this season, I thought this would be a great subject to tackle!

What Is A Gift Tax?

A gift tax is the tax on money or property that one living person gives to another. Items received upon the death of another are considered separately under the inheritance tax. Many gifts are not subject to taxation because of exemptions given in tax laws.

The gift tax is a tax on the transfer of money or property to another person while getting nothing (or less than full value) in return.

You can give up to $15,000 to someone in a year and generally not have to deal with the IRS about it

The Annual Exclusion

The annual exclusion is per recipient; it isn’t the sum of all your gifts. That means, for example, that you can give $15,000 to your cousin, another $15,000 to a friend, another $15,000 to the neighbor, and so on all in the same year without having to file a gift tax return

Gifts between spouses are unlimited and generally don’t trigger a gift tax return. Gifts to nonprofits are charitable donations, not gifts.

And here’s another bonus if you’re married: You and your spouse are each entitled to a $15,000 annual exclusion. Technically, you could give your son and his spouse $60,000 toward that house—$15,000 to each of them from both you and your spouse. That’s a lot of cash!

There is also a lifetime gift tax exemption to consider. As you might imagine, most people don’t even come close to the lifetime exemption when giving gifts. If you were wondering… This limit is $11.8 million. If you would like to hit that limit, I am open for gifts! However, if you’ve given a whole lot of gifts in your lifetime and have already exceeded the current lifetime exemption amount, you’ll have to pay the gift tax on any amounts you give beyond the annual exclusion.

What To Do

You must report gifts over the annual exclusion to the IRS on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. This records how much you’ve gone over the annual exemption each year—the amounts that count against your lifetime exemption.

I know that it sounds bad that there could be taxes on gifts, but there are reasons why there could be taxes. Without the gift tax, large estates could be reduced by simply giving the money away prior to death, and thus escape any potential estate tax.  Don’t let the gift tax stop you from giving cheerfully this season or any other season.

Carrolina Kizzee
Front Office

The Molen & Associates Difference

Mike Forsyth

“Super helpful and timely. This is our first year with them and we look forward to trusting them with our taxes and business books for years to come.”

Caitlin Daulong

“Molen & Associates is amazing! They run an incredibly streamlined process, which makes filing taxes a breeze. So impressed with their attention to detail, organization, and swift execution every year. Cannot recommend them enough!”

Sy Sahrai

“I’ve been with Mr. Molen’s company for few years and I felt treated like family respect and dignity. They are caring, professional and honest, which hard to find these days. Love working with them.”

Charitable Planning: A Strategic Approach to Philanthropy and Tax Benefits

Charitable Planning: A Strategic Approach to Philanthropy and Tax Benefits In the realm of financial planning, charitable planning stands out as a multifaceted strategy that not only furthers philanthropic goals but also offers significant tax advantages. This article...

Maximizing Tax Benefits through Strategic Business Vehicle Usage

Maximizing Tax Benefits through Strategic Business Vehicle Usage In the realm of business operations, the utilization of vehicles plays a pivotal role in ensuring efficiency and effectiveness in service delivery, client engagement, and overall operational logistics....

Understanding the 529 Savings Plan: A Comprehensive Guide

Understanding the 529 Savings Plan: A Comprehensive Guide In the realm of education financing, the 529 Savings Plan stands out as a pivotal tool for families and individuals aiming to manage the rising costs of education. This article delves into the intricacies of...

Tax Scams and Fraud: Navigating the Maze of Tax Scams and Fraud Awareness

Stay Alert: Navigating the Maze of Tax Scams and Fraud Awareness In an era where digital convenience meets sophisticated cyber threats, tax scams have emerged as a significant concern for taxpayers. The Internal Revenue Service (IRS) continuously warns the public...

Navigating the World of Business Expense Deductions: A Comprehensive Guide for Small Businesses

Navigating the World of Business Expense Deductions: A Comprehensive Guide for Small Businesses In the dynamic landscape of small business operations, understanding the nuances of business expense deductions can significantly impact your financial health and tax...

Unlocking the Benefits of Charitable Contributions: A Guide to Maximizing Your Tax Advantages

Unlocking the Benefits of Charitable Contributions: A Guide to Maximizing Your Tax Advantages In the realm of personal finance and tax planning, charitable contributions emerge as a powerful tool not only for supporting causes close to your heart but also for...

Detailed Guide on Cryptocurrency Taxation and Reporting

Detailed Guide on Cryptocurrency Taxation and Reporting  In the United States, the Internal Revenue Service (IRS) has clear guidelines on the taxation of cryptocurrency, which is considered property for tax purposes. This classification has significant implications...

Gig Economy Taxation: a Detailed Overview

Gig Economy Taxation: a Detailed Overview Reporting Income as a Gig Worker Gig economy workers must report all income earned from their endeavors. This includes, but is not limited to: Earnings from part-time, temporary, or side gigs. Income not reported on...

Standard Deduction vs. Itemizing: A Comprehensive Guide for Small Business Owners and Self-Employed Individuals

Standard Deduction vs. Itemizing: A Comprehensive Guide for Small Business Owners and Self-Employed Individuals   As tax season approaches, one of the most significant decisions you’ll face as a small business owner or self-employed individual is whether to take...

Real Estate and Taxes: A Comprehensive Guide

Real Estate and Taxes: A Comprehensive Guide Real estate taxation is a multifaceted topic that encompasses various forms of taxes, including income tax, property tax, and sometimes even sales tax. Whether you’re dealing with personal or business real estate,...

Request an Appointment Today

2 + 12 =

Call us at

Pin It on Pinterest

Share This