Gift Tax

The "reporting" part.

They don't want to deal with the hassle of filling out another tax return, and perhaps also they value the privacy aspect of not having to report who they are giving their money to.

-Mark Bole

Unless the law changes, the estate tax exemption goes back to $1 million next year. As long as your entire taxable estate is less than that (remember to include the death benefit from any life insurance you may have), then there will be no tax.

If you make a current gift of $50,000, that amount will not be deducted from estate tax, but added to your taxable estate to determine your estate tax.

That is to say if your estate is worth $975,000 when you die, the $50,000 will be added to make it $1,025,000, and will result in an estate tax of about $10,000.

You're not missing a thing.

Stuart A. Bronstein wrote in misc.taxes.moderated:

Thank you Mark and Stuart for your consult. It was much appreciated. I'm not sure I'm going to be gifting that amount, but in case I do, I wanted to be sure there wasn't something I didn't know about that would come back to bite me.

Thanks again.

inc

If you and the recipient are both married, then it's under the annual limit.

Deducted from the non-taxable amount; but only $37,000 if neither of you is married, $24,000 if one of you is (and $0 if both).

Seth

There is one other thing that occurs to me. If you are married (and/or if the person you are making the gift to is married) you can double the gift. So a married couple can make gifts to another married couple of up to $52,000 without having to incur any gift tax, present or future. If you are not in a community property state you may still have to file a gift tax return, however, if you want one spouse's gift to be treated in part as coming from the other spouse.