Next Generation Gifting Considerations

摘要

Giving financial gifts to children or grandchildren can help reduce your estate taxes. However, if you are concerned about wasteful spending by the recipients, there are several options that allow you to exercise some control over how the is money used. Federal law permits unlimited tax-free annual exclusion gifts of up to $14,000 per recipient ($28,000 if married), without the donor having to file a federal gift tax return. If you make a gift to any person in excess of the annual exclusion amount, you will be required to file a federal gift tax return. However, if your gift exceeds the $14,000 annual gifting amount or $28,000 jointly (husband and wife), the excess amount will reduce your lifetime gift and estate tax exemption - currently $5.45 million per individual ($10.9 million per married couple) - and you will need to file a gift tax return (Form 709), but will not have to pay any gift tax. The gift will simply reduce the amount of your lifetime exemption amount. Taxes may not be owed in this instance, but you will be required to file a gift tax return.