Know the financial gift limits to avoid unnecessary taxes.
You might have heard about financial gift limitations and wondered if that’s something that applies to the financial gifts you give your kids and grandkids. But are these financial gift limits something that you need to worry about?
Most people can avoid worrying about the limitations of financial gifts, and there are several reasons why.
Now, if you’re the person who is giving financial gifts and worry about these limitations and additional taxes, you should know that these financial gift limitations only apply to people.
If you’re giving money to a registered non-profit, the gift limit doesn’t apply, and even if you exceed the $15,000 annual limit, you still won’t have to pay a financial gift tax. This money is considered a donation and is exempt from this rule.
Avoiding Financial Gift Limitations
The easiest way is to only gift individuals a certain amount. The limit is $15,000 annually per individual OR a lifetime limit of $11.7 million per individual. So even if you give your kids or grandkids $15,001 in one year, you may be exempt from the limitation because you didn’t exceed the lifetime limit.
If you do give over $15,000 to someone, you’ll likely need to file a gift tax return, but that doesn’t necessarily mean you’ll have to pay taxes on that gift. The IRS would just like to know about the thousands of dollars you’re giving away.
These gift limits aren’t set in stone. These amounts change, so while the current lifetime limit is $11.7 million, that's likely to change and you can continue to shower your loved ones with funds.
If you’re in a position where you think the financial gift limit does apply to funds you gifted your loved ones, contact the office today. We can discuss and help identify whether that limit and corresponding taxes apply.
This communication is designed to provide accurate and authoritative information on the subjects covered. It is not however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.
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