With the end of the year and the holiday season approaching, both individuals and married couples are looking to maximize gifting opportunities while minimizing tax implications. Being knowledgeable about the gift tax annual lifetime exemption is important for structuring gifts that you may wish to pass on to others.
Any individual can give up to $14,000 worth of assets every year under the annual exclusion. This means that you do not have to report that gift to the government for the purposes of taxes and these these payments can be spread out throughout the year, such as gifts for birthdays and Christmas. This enables married couples to pass on up to $28,000 annually without bumping the lifetime exemption of $5 million. Trying to pass on inheritances above this lifetime amount can come at a high price in terms of taxes without proper planning, which is why an annual estate and tax planning review session can be helpful for telling you where you’re at and how you can best prepare for the future.
When used properly, gifting can be a critical tool for eliminating or minimizing taxes. Taking advantage of the annual exclusion and the lifetime credit can allow you to pass on assets to beneficiaries without concerns over the tax implications. To discuss the details of gifting and how it can help reduce the size of your taxable estate, contact our office for a personalized consultation at email@example.com.