Gift Giving the Tax-Free Way
Your Yearly Coupons
- Annual exclusion gifts. These gifts are transfers of money or property that do not exceed the annual gift tax exclusion. These gifts can be given on one or more than one occasion throughout the year, the key is that you add up the gifts throughout the year. In 2018, you can give up to $15,000 ($30,000 for married couples) per recipient without having to pay any gift tax or file a gift tax return. These gifts can be cash or property but they must be of a “present”interest. Gifts using trusts or certain types of property (like closely held businesses) can be tricky because the “present” interest requirement can be missing. If you plan on using a trust or an LLC to make your gift, it’s best to work with a professional.
- Pay medical bills. The IRS also allows you to pay an unlimited amount of someone’s medical bills, without worrying about the gift tax. However, the payment must be made directly to the doctor, hospital, or other medical provider in order to qualify.
- Pay tuition. Additionally, you are able to pay an unlimited amount of tuition bills for the benefit of someone else, as long as the tuition is paid directly to a qualified educational institution. One big issue here is that the gift must be only for tuition – books, fees, living expenses, travel, and other costs of education do not qualify.
- Give to charity. For those of you who are philanthropically minded, you can give as much money or property to a qualified charity as you want without worrying about the gift tax. As an added benefit, unlike the gifts above, you may also be entitled to an income tax deduction for the charitable gift.
Your Once-In-A-Lifetime Coupon
When should I talk to an estate planner?
While we don’t suggest you give away anything that you might need, if you do have some surplus, gifting programs are a fun way to see your loved ones enjoy your generosity. Call or contact us today so we can help make sure you do it without drawing the attention of the IRS.