Are you a high wealth individual? Gifting some of your assets is a proactive way to reduce the size of your estate and perhaps avoid paying estate taxes later. Here are three things you need to know:
- This year, the gift tax exclusion is $14,000. This means that you can give away up to $14,000 each year to as many people as you wish without having to pay the federal gift tax and without having to file a gift tax return. If you are married, each spouse can do so – that is, combined, $28,000 each year to any number of individuals.
- If you gave gifts to any one person in excess of the exclusion amount ($14,000 for a single person, or $28,000 for a married couple) you must file a gift tax return. Gift tax returns are due on the same date as your regular tax return – April 15 (or October 15, if you file an extension).
- There is also a lifetime exclusion amount of $5.43 million, so even if you end up having to file a gift tax return, that doesn’t necessarily mean you will owe taxes.
As with anything pertaining to taxes, things can get complicated. Call us and we can help you with estate planning and in determining if gifting will benefit you and your heirs.