Biden tax plan series
WHAT Is a Gift Tax?
Gift tax is a federal tax applied to an individual giving anything of value to another person. The donor must report the gift on a tax return and pay the gift tax. Normally, the recipient doesn’t have to report the gift. In summary:
- Gift tax is a federal tax levied on a taxpayer who gives items of value to someone else.
- The gift tax ranges from 18% to 40%, depending on the size of the gift.
- The lifetime exemption is $11.7 million for a single donor.
- Excluded from the gift tax are gifts made to spouses who are U.S. citizens and gifts valued at less than the annual exclusion amount.
- Use IRS tax form 709.
Current Tax Law:
- You can gift up to $15,000 per year per recipient have those gifts excluded from gift tax.
- A couple can gift up to $30,000 per recipient per year.
- You can gift to an unlimited number of recipients.
- You can also receive an unlimited amounts of gifts from any number of donors.
- Do all these with no gift tax ramifications. Bueno.
Proposed Tax Changes:
- Proposed law would reduce the maximum annual gift exclusion to $10,000 per recipient.
- Donors would be limited to total annual gifts of $20,000 that would be excluded from gift tax.
- Worst, no recipient could receive more than $10,000 per year. Malo.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation.
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He retired after 50 years of defending taxpayers audited by the IRS, EDD, BOE and other governmental agencies. He published a book on “How to Avoid or Survive IRS Audits” that’s available at Amazon. Readers may email tax questions to [email protected].
