Peshke Financial
  • Services
    • Tax Preparation
    • Home Loans
    • Personal Finance Coaching
  • About Us
    • Meet Chad
    • Meet Emilie
    • Chad's Story
  • Client Resources
    • Tax Resources
    • Home Loan Resources
    • Financial Coaching Resources
  • E-News
  • Client Reviews
  • Contact Us
  • Services
    • Tax Preparation
    • Home Loans
    • Personal Finance Coaching
  • About Us
    • Meet Chad
    • Meet Emilie
    • Chad's Story
  • Client Resources
    • Tax Resources
    • Home Loan Resources
    • Financial Coaching Resources
  • E-News
  • Client Reviews
  • Contact Us
Search by typing & pressing enter

YOUR CART

E-News

Making Finances Simple. Changing Lives.

9/9/2013

How To Avoid Taxes On Gifts

Clients often ask us how much money they can give to others without facing gift taxes. See below for a detailed explanation of how you can avoid paying Uncle Sam for these gifts.........

(original article updated to reflect most recent tax year)
The annual exclusion for gifts in 2023 is $17,000. This means you can give any individual $17,000 in the calendar year without having to worry about gift taxes. Spouses can combine their annual exclusions to double the size of the gift given to each person.

For example, if John and Jane are married with a child, they could give that child $34,000 in 2023 ($17,000 from each parent). If the child is married with two children, John and Jane could also give their child’s spouse $34,000...and give their two grandchildren $34,000 each. This allows John and Jane to give their immediate family $136,000 per year without any gift taxes.

Gifts that exceed the annual limit count against the lifetime exclusion, which is $12.92 million in 2023. So if the above married couple gave their child $50,000; that amount exceeds the eligible $34,000 by $16,000. The couple would have to file a gift tax return to show this $16,000 is not taxable, since it is being counted against the $12.92 million lifetime exclusion. If your gift amount exceeds the annual limit, you must file a gift tax return. NOTE: This annual exclusion amount can change at any time. It is possible this figure could dip down to $1 million in future years.

If you exceed the lifetime limits, you could wind up owing gift tax of up to 40%. Even if you don’t, your lifetime gifts would reduce how much you can pass tax-free through your estate plan.

There are many strategies you can apply to avoid gift taxes. Let’s show an example using a married couple with a child like John and Jane above. John and Jane want to give their married son a cash gift to be used for a down payment on a house. They could actually give $136,000 to their son (and his wife) in a two-day period; and they could do this without exceeding the annual exclusion. This is done by giving $34,000 to their son and $34,000 to his wife on December 31st. They could then give another $34,000 to each of them on January 1st. Remember, the annual limit is accounted for on a calendar basis. So a married couple could theoretically give $68,000 to any person in a two-day period.

Contact us with any questions on gift taxes...we’re here to help!


Comments are closed.

SERVICES
ABOUT US
CLIENT RESOURCES
E-NEWS
CLIENT REVIEWS
CONTACT US

Picture
Picture
​​© 2023 Peshke Financial Inc., all rights reserved. NMLS #2244878. "Making Finances Simple. Changing Lives." is a pending trademark with USPTO. Material contained in this website is for informational purposes only and is not meant to be construed as direct financial advice for your specific situation. It is recommended that you consult with your own advisors for any personalized financial guidance. Since we’re not licensed attorneys, we cannot provide legal advice. As such, any info contained in this website should not be construed as direct legal advice. Individual Licensure (see profiles) - click here. Send Docs Securely - click here.