Minimize Tax Liability with the Annual Gift Tax Exclusion
The end of the year is an important time to take a quick look at your tax position and make sure that you have done all you can to minimize your tax liabilities. Individuals looking to minimize their estate tax liability will want to set up a gifting plan that takes advantage of the available annual exclusions to pass wealth on to their intended beneficiaries without incurring any tax.
The tax code permits gifts of up to the annual exclusion ($14,000 per donee for tax years 2014 and 2015) which incur no tax and do not trigger any filing requirement. For any tax year in which the gifts to a single individual exceed the annual exclusion, the donor (the person making the gift) will need to prepare and file a gift tax return and either pay the tax or utilize a portion of the available lifetime gift exclusion.
Married couples can give up to twice this amount tax-free through separate gifts to the same donee. Each gift giver and recipient has their own unique annual exclusion; a giver can give to any number of recipients and the exclusion is not affected by other gifts that recipient may have received from others.
But remember that the annual gift exclusion will only apply to gifts that are completed (i.e. received and accepted) before the end of the year. If you send a check in the mail, you will want to make sure that it is deposited and withdrawn from your account prior to the end of the year.
Annual gifting plans can be complex and they require strategic planning to leverage the most use in moving property out of your taxable estate. It is important to obtain the help of a seasoned estate planning attorney at Nielsen Law Group for help. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.