Gifting limits and you!
- If you’re a resident citizen of the US, you can give any other individual up to $14,000 per year.
- It is not a tax deduction to the person giving the money, but it is also not income to the person receiving the money.
- That gift can be used for any purpose, of course legal, but that $14,000 is absolutely, basically, tax-free income. Tax-free money and be gifted every year; excellent for estate planning.
Hey everyone. It’s Shauna, the Tax Goddess, live to you here from Scottsdale, Arizona and my goodness is it warming up! The joys of Arizona in the summertime, but you know I would never rather be anywhere else. I love Arizona. Part of the reason I love Arizona is the tax laws here. Definitely a little bit cheaper than California. All the good bits, although you guys have better weather generally in California, but it is what it is.
Today we are actually here to talk about the gifting limits. I’m not sure you all know this. I’m not sure we’ve ever had this discussion, so any individual can give any other individual, if you’re a resident citizen here of the US, any individual to any other individual up to $14,000 per year. Now, it is not a tax deduction to the person giving the money, but it is also not income to the person receiving the money.
That gift can be used for any purpose, of course legal, but that $14,000 is absolutely, basically, tax-free income. Tax-free money. Now what a lot of people will do is they’ll use that gift … Now … Let’s say for example it’s a mother and father for a child. The mother can give 14, the father can give 14. Generally under the current law, you do not want to surpass I’d say 13.5, because of course, generally as parents, you’re giving Christmas presents, birthday presents. The gift includes all gifts. All kinds of gifts. If you’ve given any kind of cash, if you’ve given any kind of goods, be really careful about that. The IRS could potentially come back and ask you about, “Well, so you gave $14,000 in cash, you didn’t give even a single Christmas present or a holiday present?” Always be careful. Always leave a little bit of fudge room just in case.
The second piece of this and really where people use that gifting is actually in the estate plan. What most people are trying to do is if their estate is valued at more than at the moment, 5.49 million, which is the lifetime gifting limit. People are trying to get money and assets out of the estate. They may set up something like a family limited partnership to be able to put the assets into the family limit of partnership and then gift away little tiny percentages of those assets up to that $14,000 limit per year to the children, to the grandkids, to whatever it is.
Now the $14,000 limit, you’re allowed to do that as many years as you are alive. It’s $14,000 per person, per year. There is no … It’s not 10 years, 20 years, it’s however long you want to. Depending on how long you’re living and how much in assets you need to gift away, you can really use this to your advantage to get assets out of your estate.
If you guys have any questions on gifting and how gifting works, there are some differences if you are not a citizen or if you’re a non-resident, there’s some differences, so be careful about that. Always reach out to your CPA or your tax goddess if you need our help on any kind of gifting
Hope you’re having a wonderful day and happy week after Memorial Day! I hope everybody had a great Memorial Day and I guess I will talk to you all later. All right, thanks. Bye.