If you are someone who regularly gives away large amounts of money or property then it is important for you to be familiar with the gift tax limits. The gift tax limits are set in to place so that your gifts are taxable above a certain amount.
Currently the IRS will allow you to give away up to $12,000.00 annually without having to pay any tax on the gift. This $12,000.00 can be given to one person or any number of people. If you are married then this amount increases to $24,000.00.
One important thing to remember is that the recipients of your gift will never have to pay any tax on the gift.
How Much Can I Give In a Lifetime?
You are allowed to give up to one million dollars in gifts above the annual limit in your lifetime without having to pay taxes. This means you need to plan carefully to ensure you do not exceed your annual limit as well as your lifetime limit.
Why Is There a Gift Tax?
The gift tax was imposed to prevent taxpayers from giving away everything they own before they die to avoid paying estate tax. If you do go beyond the gift tax limit then you could be taxed as high as 45%. So be careful with the amounts you are giving away.
We suggest using an online tax preparation service such as TurboTax Online that will help you calculate the amount you have given away and if you owe any tax on those gifts.
