Give Big Gifts for Back-to-School without Taxes?
Give Big Gifts for Back-to-School without Taxes?
Here is a prediction: Those that give grandchildren back-to-school gifts of $25,000 each this year will not pay any gift tax. Surprised? Skeptical?
Read on.
The IRS allows everyone to give away $15,000 per year to as many people as they would like without reporting it to the IRS. But if you give away more than $15,000 to anyone, you will need to report the gifts to the IRS, but likely will NOT pay taxes of any kind.
READ THAT AGAIN!
… if you give away more than $15,000 to anyone, you will need to report the gifts to the IRS, but likely will NOT pay taxes of any kind!!
Here is why:
In 2021, individuals can gift $15,000 per year to anyone, PLUS up to $11.7M over their lifetime. Married couples can each gift $15,000 per year to anyone ($30,000 total), PLUS up to $23.4M during their lifetime before any gift tax is owed.
Here is an example:
Every year during the last 20 years, a grandmother reports that she gave away $20,000 over the annual gifting exemption. That is $400,000 ($20,000 x 20 years) over the annual gift exemption.
But no tax is due because that $400,000 is applied to her $11.7M lifetime gifting exemption, leaving “only” $11.3M of gifting over $15,000 per year without tax liability.
I have met plenty of wealthy people since I began my estate planning practice in 2006. Not one of them had given away tens of millions of dollars more than the annual gifting exemption.
So, do not fear giving away more than $15,000 to anyone. In the words of Bobby McFerrin, “Don’t worry. Be happy.”
