Some gifts are big, others are small - and the Internal Revenue Service expects you to report them all. Or do they?
Gift giving may not be a traditional summertime activity, but tax planning is. This year, a slowing economy might lead you to help family members with upcoming fall college bills or unexpected expenses.
Now - before you write the checks - is a great opportunity to get a handle on the rules. Here are two:
Tax returns are not always required. The person receiving your gift does not have to file a return, no matter the amount.
More good news: When you give gifts of $12,000 or less to any one person within a calendar year, you don't have to file a return either. If you're married, your spouse can also make gifts of $12,000 to the same or different recipients without the need to file a return.
Other non-reportable gifts include amounts you pay for anyone's tuition or medical bills, as long as you write the checks directly to the school or health care facility. That's true even if the cost exceeds $12,000.
When a return is required, you may not owe gift tax. Under present tax law, up to $1 million of gifts made during your lifetime can be shielded from tax. This is in addition to the $12,000 per donee annual exclusion.
Call us about other rules that apply to your situation. We'll be happy to discuss tax-wise strategies and help you make the most of your gift giving.
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