Any American tax professionals out there?

I need to know if this Lifetime exclusive gifts is legitimate? As I understand, a parent can give a child up to $15k without a tax penalty. If they go over that amount they cans still avoid the tax penalty as long as they dont exceed the Lifetime exclusion amount of $11.7 million. Is this true? Help would be greatly appreciated.
Travis

Comments

  • MichelleMichelle California
    @Travis this is calling your name!
    Travis
  • HatorianHatorian Dagobah
    History lesson. Income tax was created to pay for war… 
    Travis
  • I want to disclaim this before getting going. Gift taxes are not my desk, and while I did learn about them in getting my certification (I'm an EA, not a CPA), much like the Spanish and German I learned in high school, it's all Greek to me now (rimshot). Ultimately, this is not professional advice as I really am not qualified to give it, even if my qualifications would say otherwise. If you have any questions about 1040 type stuff or small scale corporations, I'm much better equipped there.

    That said, the current annual exclusion is $15k as you mentioned. To the best of my knowledge there is nothing to do if you don't cross that threshold. The only exception I can think of that would make me wrong is if you have filed in the past and you have to do the sort of filing whose only point is to maintain the calculation, but I'm ~95% sure it is just not something that needs to be done. Also, double this for a married couple, but make the gifts separately (2 checks for $15k, or make sure that property is jointly owned, which in most cases it will be).

    You are also correct about the lifetime amount (looked it up to be safe). You need to file if you're over $15k for a gift, but it will be entirely offset. The thing that I really can't guarantee, but only state my somewhat educated belief is that there is no implication to your final estate if it ends under that amount. It makes sense because the lifetime exclusion seems to line up with the total exclusion for the estate. That said, I just don't know all of the mechanics concretely. Gift taxes aren't my bailiwick.

    I'll try to keep an eye on this thread, but if it all still goes without a concrete answer in a few days I can ask my boss and I'm sure he can rattle off whatever you need. I just don't want to bug him, particularly on a Friday when he only works a half day.

    Hope that helps.

    adobo1148awookieeHatorianNoel
  • Travis said:

    I want to disclaim this before getting going. Gift taxes are not my desk, and while I did learn about them in getting my certification (I'm an EA, not a CPA), much like the Spanish and German I learned in high school, it's all Greek to me now (rimshot). Ultimately, this is not professional advice as I really am not qualified to give it, even if my qualifications would say otherwise. If you have any questions about 1040 type stuff or small scale corporations, I'm much better equipped there.

    That said, the current annual exclusion is $15k as you mentioned. To the best of my knowledge there is nothing to do if you don't cross that threshold. The only exception I can think of that would make me wrong is if you have filed in the past and you have to do the sort of filing whose only point is to maintain the calculation, but I'm ~95% sure it is just not something that needs to be done. Also, double this for a married couple, but make the gifts separately (2 checks for $15k, or make sure that property is jointly owned, which in most cases it will be).

    You are also correct about the lifetime amount (looked it up to be safe). You need to file if you're over $15k for a gift, but it will be entirely offset. The thing that I really can't guarantee, but only state my somewhat educated belief is that there is no implication to your final estate if it ends under that amount. It makes sense because the lifetime exclusion seems to line up with the total exclusion for the estate. That said, I just don't know all of the mechanics concretely. Gift taxes aren't my bailiwick.

    I'll try to keep an eye on this thread, but if it all still goes without a concrete answer in a few days I can ask my boss and I'm sure he can rattle off whatever you need. I just don't want to bug him, particularly on a Friday when he only works a half day.

    Hope that helps.

    Thank you so much, any insight is very helpful
    Travis
  • My pleasure. Sorry I can't be more "I've got this shit on lock" about it, but that would be pretty irresponsible. Glad I could help.
    Freddy
  • MichelleMichelle California
    Travis said:

    I want to disclaim this before getting going. Gift taxes are not my desk, and while I did learn about them in getting my certification (I'm an EA, not a CPA), much like the Spanish and German I learned in high school, it's all Greek to me now (rimshot).

    Oops!  So sorry!!  I hope I didn't put you on the spot.  You were the first person I thought of.
    Freddy
  • Michelle said:
    Travis said:

    I want to disclaim this before getting going. Gift taxes are not my desk, and while I did learn about them in getting my certification (I'm an EA, not a CPA), much like the Spanish and German I learned in high school, it's all Greek to me now (rimshot).

    Oops!  So sorry!!  I hope I didn't put you on the spot.  You were the first person I thought of.

    No worries at all. I still like to try to help, and I feel alright about my knowledge (at least as it relates to that particular question), but when it comes to issues like these and the potential consequences I like to lay it right out there and make it incredibly clear that I should not be considered a "professional" in that particular focus. I should be under the banner of my certification, but since it never comes up for me I'm too rusty to not disclaim, or hedge within the explanation. Mostly I don't want to give incorrect facts on accident and have someone rely on them. I'm glad you tagged me though. It got me thinking about stuff I haven't thought about in a very long time (aside from that annual exclusion which seems to come up a time or two every year).
    HatorianMichelle
  • @adobo1148 For what it's worth, I ran this by my boss in a slow moment and he said that I was correct in what I told you. I'd double check that $11.7 Million figure just in case, but the quick breakdown is:

    1. Gift under $15k (per spouse), no gift tax return required
    2. Gift over $15k (per spouse, but I would make sure the write separate checks or maybe consult someone if we're talking about property) and a gift tax return is required, but no taxes will be due unless the total of your gifts exceeds $11.7M (approximately, whatever the number is).
    3. The gift amounts against the exclusion follow the estate through the end of your life and your estate has an exclusion of however much is left of the ~$11.7M.
    4. One thing to keep an eye on. The exemption doubled under the TCJA and that can expire in 2026(?). Don't know what may happen, but it's a question to maybe pose to whoever would prepare the gift tax returns and I imagine has a better handle on estate issues than I do (I just realized this expiration thing now and haven't spoken to my boss about that)..

    adobo1148
  • Thanks for this, I’ll make an appointment with a Tax professional or CPA soon. Another question, does it matter if I meet with a CPA or just a tax professional at say an H&R block? Thanks
    Travis
  • You should be fine with a HR Block sort of thing. I've never dealt with Block before, but intuitively, with it being a specific issue I would make sure they know what you're coming for in case they have a specific person that handles Gift Tax/Estate issues. I don't know for sure that they do it "departmentally" for lack of a better word, but my gut says they do.
    adobo1148
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