Author Topic: Maximum annual gift limit  (Read 2522 times)

SpacemanSpiff

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Maximum annual gift limit
« on: August 13, 2015, 02:25:28 PM »
If a couple would like to give a financial gift to their child and their child's spouse, what is the maximum amount they can give to that couple?

I have heard it is $52k as it is 4 times the annual gift limit of $14k, since each parent can give the child a gift of $14k as well as give the spouse a gift of $14k.

Anyone have any experience with this or able to verify?

Note: As much as I wish the parentals were considering giving my wife and I a gift of $52k, such is not in the cards haha.

seattlecyclone

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Re: Maximum annual gift limit
« Reply #1 on: August 13, 2015, 02:54:22 PM »
There is no gift limit. You can give someone as much as you want. Gifts over $14k do need to be reported. Therefore you're right that one couple can give another couple $56k (each member of the giving couple gives $14k to each member of the receiving couple) without having any tax implications whatsoever. However even if you do give enough that you have to report it, no federal tax is due until the lifetime total of such gifts exceeds the combined gift/estate tax limit ($5.43 million per giver this year).
« Last Edit: August 13, 2015, 02:59:55 PM by seattlecyclone »

acorn

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Re: Maximum annual gift limit
« Reply #2 on: August 13, 2015, 03:00:19 PM »
according to the IRS, there is a gift tax .
Quote
What can be excluded from gifts?
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.
1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
3. Gifts to your spouse.
4. Gifts to a political organization for its use.
In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.

Quote
How many annual exclusions are available?
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2014 and 2015 is $14,000.

So gifts under $14k to children won't be taxed, but anything above that will be.

seattlecyclone

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Re: Maximum annual gift limit
« Reply #3 on: August 13, 2015, 03:24:47 PM »
So gifts under $14k to children won't be taxed, but anything above that will be.

It's not quite that simple. Gifts over $14k where no other exclusion (gifts to spouse, charity, political groups, direct payments of tuition or medical expenses) applies can be taxed, but only after your lifetime exclusion runs out. You start with $5.43 million. Give $104k to your child, $90k is above your annual $14k exclusion so that part is taxable. $5.43 million - $90k = $5.34 million. You won't owe any gift tax until your future taxable gifts exceed this amount. Then when you die, whatever exclusion amount remains will be subtracted from the value of your estate to determine how much (if any) estate tax you will owe.

For most mere mortals, the gift tax is completely irrelevant. If you give a large enough gift you'll have to fill out a form to track your remaining lifetime exclusion, but it will otherwise have no effect on your finances.

acorn

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Re: Maximum annual gift limit
« Reply #4 on: August 13, 2015, 03:37:24 PM »
So gifts under $14k to children won't be taxed, but anything above that will be.

It's not quite that simple. Gifts over $14k where no other exclusion (gifts to spouse, charity, political groups, direct payments of tuition or medical expenses) applies can be taxed, but only after your lifetime exclusion runs out. You start with $5.43 million. Give $104k to your child, $90k is above your annual $14k exclusion so that part is taxable. $5.43 million - $90k = $5.34 million. You won't owe any gift tax until your future taxable gifts exceed this amount. Then when you die, whatever exclusion amount remains will be subtracted from the value of your estate to determine how much (if any) estate tax you will owe.

Oh I see! Thanks for the info. I learnt something new today.