People who want to give a large amount of money to another person often have questions about how much they can give without having to pay taxes on the gift. Fortunately, the gift tax is relatively simple once you know the basics.
Many parents find themselves in a position where they want to give a large sum of money to an adult child in need. They often wonder if they can do so without having to pay tax on the gifts.
One such parent recently wrote to Money and asked if he could give $15,000 to a child to pay off the child’s debt.
The answer, given in a Money article titled “When Does a Gift Trigger a Tax Bill?,” contains a good explanation of the basics of the gift tax.
As the article explains, you can give up to $14,000 a year to any one individual without triggering the gift tax. You can also give up to $5.43 million in total gifts during your lifetime.
For married couples those numbers are doubled.
It is important to note that more can be given to pay tuition or medical expenses. Gifts for those purposes are always tax-free.
If you need to give more than that to a child, you might be able to if your child is married. You can give $14,000 to your child and up to another $14,000 to your child’s spouse.
If you have other questions about the gift tax or want to know how making gifts can be integrated into your estate plan, speak with an estate planning attorney.
Please contact our office today at 239-225-7911 to schedule an appointment with Barbara M. Pizzolato if you are interested in protecting your legacy and need to create or update your estate plan. You may also wish to attend one of our free seminars.
Reference: Money (May 5, 2015) “When Does a Gift Trigger a Tax Bill?”