On behalf of Law Offices of Frye, Fortich & Garcia, P.L. | December 8, 2021 | Estate Taxes
Do you have money or property that you don’t want to be taxed? Maybe taxes aren’t the issue, you just genuinely want to do something nice for a friend or family member. How about making a gift? After all, giving away your property saves you from paying income taxes on the income generated by the property, and the receiver is free from being taxed on it because it is, after all, it is a gift…right?
Why is there a Gift Tax
The gift tax actually was started to prevent people who tried to avoid the estate tax, from giving out their assets to others just before they passed away. The giver, not the receiver of the property pays the gift tax, and the tax does apply to gifts to family members, although gifts to spouses may qualify for other exemptions. Currently, an individual may transfer an unlimited amount to their spouse at any time and not be subject to Federal Gift Tax.
The Federal tax code provides ways to make tax-free gifts. You can increase your family’s after-tax wealth by using these methods to the extent they fit your estate and family situation
Gifts up to $15,000 per person per year in 2021 are not taxable by the Federal Government, and that amount will rise to $16,000 in 2022. You can give up to $15,000 worth of money and property to any individual during the year without any estate or gift tax consequences. The gift may be in one transaction or a series of transactions. These gifts will not count against your lifetime estate and gift tax exclusion, and the recipient won’t owe any federal taxes on the gift.
You can make these gifts to as many people as you want during the year, with a separate $15,000 tax-free limit on the gifts to each person and no aggregate limit for you. A recipient does not need to have any family or other relationship with you for the gift to be exempt from Federal Tax.
Contact an Experienced Estate Planning Attorney
If you would like to learn more about these and other important estate planning issues consider speaking with an experienced legal professional as soon as possible.
