W. Edward Newton Jr., CPA, CFP (R) | 13850 Ballantyne Corporate Place, Suite 500 | Charlotte, NC 28277 | 704-552-8689

 


8 Tips to Understanding the Gift Tax


 

If you gave money or property to someone as a gift, you might owe federal gift tax.

 

Many gifts are not subject to the gift tax, but there are exceptions. Here are eight tips you can use to figure out whether your gift is taxable.

1. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you make a gift to someone else, the gift tax usually does not apply until the value of the gifts you give that person exceeds the annual exclusion for the year. For 2018 the annual exclusion is $15,000 (up from $14,000 in 2017).

2. Gift tax returns do not need to be filed unless you give someone, other than your spouse, money or property worth more than the annual exclusion for that year.

3. Generally, the person who receives your gift will not have to pay any federal gift tax because of it. Also, that person will not have to pay income tax on the value of the gift received.

4. Making a gift does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than deductible charitable contributions).

5. The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. The following gifts are not taxable gifts:

- Gifts that are do not exceed the annual exclusion for the calendar year,
- Tuition or medical expenses you pay directly to a medical or educational institution for someone,
- Gifts to your spouse,
- Gifts to a political organization for its use, and
- Gifts to charities.

6. You and your spouse can make a gift up to $30,000 to a third party without making a taxable gift. The gift can be considered as made one-half by you and one-half by your spouse.

 

If you split a gift you made, you must file a gift tax return to show that you and your spouse agree to use gift splitting. You must file a Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, even if half of the split gift is less than the annual exclusion.

7. You must file a gift tax return on Form 709 if any of the following apply:

- You gave gifts to at least one person (other than your spouse) that are more than the annual exclusion for the year.
- You and your spouse are splitting a gift.
- You gave someone (other than your spouse) a gift of a future interest that he or she cannot actually possess, enjoy, or receive income from until some time in the future.
- You gave your spouse an interest in property that will terminate due to a future event.

8. You do not have to file a gift tax return to report gifts to political organizations and gifts made by paying someone's tuition or medical expenses.


PROFESSIONAL GUIDANCE or QUESTIONS?

These are good tips & guidelines to follow regarding GIFTS. However understanding and applying these GIFT rules can be confusing.  If you need help or have a question, as always please contact us here at the office at 704-552-8689.
 


 

 


 

"Recommend" us on our Facebook FAN Page

 

Hi everyone!!  We've recently updated our business/fan page for our business.

 

If you want updates on tax or related subjects, click on this link and LIKE our page PLUS we'd love for you to RECOMMEND US on Facebook, click here to take you to the Review page so you can write a recommendation!
 

We'll post new relevant information on tax reduction, accounting & finance that you can read and comment on.

 

Thank you in advance for "Liking" us!

 



Would You Do Me A Quick Favor And Give Me An Online REVIEW on Google+ Local?

If you are a local business like I am, more and more people FIND you by going online and searching.  To help me be found the same way by good customers like you would you take 2 minutes and give me a Review on my Google+ Local listing?

 

Just click here and it will take you to my listing.  From there just click on the Write a Review button.  Thank you in advance for your help! 

If you have any questions about giving us a Review or have an accounting or investments question about yourself or your business, please give me a call at 704-552-8689.  I can help guide you in the right direction.

 

 


 

As always you can call our offices if you have any questions about these or any other accounting, tax, financial planning or Quickbooks related issues, at 704-552-8689. 

 

Regards, W. Edward Newton Jr., CPA

Certified Public Accountant

 

 

 

 

W. Edward Newton Jr., CPA | Certified Public Accountant

13850 Ballantyne Corporate Place, Suite 500 Charlotte, North Carolina 28277
Phone: (704) 552-8689  |  Email: ed@newtonassociatescpa.com