Understanding how the gift tax works is an essential part of good estate planning. A gift tax attorney can help guide you through the gifting process but put simply, the gift tax is a federal tax owed when assets are “gifted” to another person. Gift taxes can be levied on personal property, real estate, and monetary gifts.
The person giving the gift is responsible for paying the tax, but the tax is waived completely if the gift is to a spouse or if it is for medical or education purposes. In addition, any gifts to a qualifying charity or a political organization are not taxed either.
Currently, you can gift up to $13,000 per year to a single individual without paying the gift tax and you can continue to do this until you reach the $1 million dollar lifetime maximum. That means you can gift up to $13,000 of your property to whomever you choose each year. Beyond that minimum, you must file a gift tax return up to the point that the $1 million dollar threshold is reached. After that, you will be liable for a very high tax.
These limits are "per person." So if you own property jointly with your spouse, you could theoretically give up to $26,000 per year to a single individual between the two of you.
This is a popular option for seniors looking to help their heirs avoid estate taxes and, if used properly, can become a great tool in your estate planning arsenal.
To learn more about the gift tax and to find out how to best plan your estate, you should consult with a qualified gift tax attorney. Anderson, Dorn & Rader in Reno, NV has experienced attorneys that you can trust.