Here
is some background on what is known as the "annual gift-tax
exclusion." You can give away as much as $14,000 this year to anyone you
want—or to each of as many people as you wish—without any tax considerations or
burdensome paperwork. The recipient can be anyone you choose.
Giving is a real treat for those
involved, especially when gift taxes are avoided for all. But one of the
biggest sources of confusion for the Annual Gift Exclusion is the number of
such gifts you can make and to whom you can make them.
A recent Q&A in The Wall Street Journal titled [spoiler
alert] “A Tax-Free Gift Can Go to Anyone”
takes this question head on.
So, to whom may you gift assets
within the exclusion amount? Answer: anyone. That is right, it makes absolutely
no difference whether the objects of your generosity are near or far, family,
familiar, or utter strangers. Now, you might not be interested in giving much
of anything to complete strangers – charity aside – but the point is that
gifting is a malleable tool, and something you may work into a much grander
plan.
The name of the game is
understanding the annual gift tax exclusion and your lifetime gift tax
exemption.
Every individual can give up to
their annual gift tax exclusion to any other individual, and as many of them as
they care to, all tax free. To give more than the annual amount, however, will
count against your lifetime gift tax exclusion which, in turn, will reduce your
estate tax exemption available at death.
Like most areas of tax law, the
time and money spent consulting with qualified legal counsel now prior to
embarking on a gifting strategy will be time and money well spent later on.
For more information and articles on
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Reference: The Wall Street
Journal (June 16, 2013) “A Tax-Free Gift Can Go to Anyone”