Can You Give Someone Money Without Being Taxed

If you give away generous sums of money to a friend or family member, you may exist required to pay a gift tax to the IRS.  However, with a little planning, you can afford to be quite generous earlier you have to break out Grade 709 to report the amount and be on the line to pay extra money.

Hither are 3 easy ways to steer clear of the souvenir tax.

1. Double (or quadruple) your limit.

The key to avoiding paying a gift taxation is to give no more the annual exclusion amount to any one person in a given revenue enhancement year. For 2020, that amount is $15,000. This means if you want to give x people $15,000 each in one year, the IRS won't care. Withal, if you give $16,000 to just 1 person, you lot must pay a gift revenue enhancement.

The annual exclusion amount does rise periodically due to aggrandizement, so information technology'south important to double-check the amount each tax year to ensure yous don't give over the limit.

Being married is an easy way to double your giving power as both you and your spouse are entitled to the almanac exclusion amount on a gift. As long as the souvenir is given from joint property, the IRS considers the gift to be one-half from each. Therefore, you and your spouse can give $28,000 total.

The same dominion applies when you give to someone who is married. You tin give an boosted gift of up to $15,000 to the recipient'south spouse, making the annual limit from ane couple to another couple $60,000 ($15,000 Ten 4 = $sixty,000).

2. Pay medical bills or tuition direct.

While it may seem giving a check for $l,000 to a grandson about to head off to college is the aforementioned every bit writing the bank check directly to the college, to the IRS it'due south very different.

A bank check written to a college for tuition does not count as a gift for purposes of the souvenir tax. However, a check written to your grandson, regardless of what he does with information technology, is considered a monetary gift.

The same is true for medical bills. If y'all pay the money directly to the medical institution, it'southward non a gift.

If you'd like to help a family fellow member with college or medical expenses, it may exist best to pay the institution directly to avert any actress taxes.

3. Spread the gift out between years.

If you're tempted to brand a large souvenir for the holidays, consider splitting the gift into 2 checks instead.

For example, if you want to give your single developed son $20,000, first write him a cheque for no more than $14,000. Then look until the New Year to requite him the remaining amount.

What if you've already given more than the gift taxation limit?

Don't worry.

Filing a gift revenue enhancement render is not difficult, and in some cases, y'all may not owe any tax withal.

The dollar amount over the almanac limits is added upwardly throughout your lifetime. You don't owe whatever taxation until it exceeds the total lifetime limit. For 2020, the limit is prepare at $eleven.58 one thousand thousand per person.

TaxAct makes preparing and filing your taxes quick, easy and affordable then you go your maximum refund. It'south the all-time bargain in revenue enhancement. First free now or sign into your TaxAct Account.

More to explore:

• 10 Frugal Valentine's Twenty-four hour period Souvenir Ideas
• The perfect gift to give when you take zero dollars to spend
• iii Easy Means to Avoid Paying A Gift Tax
• Gift Taxation: The Tax Implications of Supporting Adult Children

Source: https://blog.taxact.com/ways-avoid-gift-tax/

Posted by: marroweaten93.blogspot.com

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