What’s New With The Annual Gift Tax Exclusion?
Once your children grow past the stage where getting a remote control car for Christmas is the pinnacle of excitement, it is best to adopt a “no gifts this year” policy. The kind of car your kids can get excited about at this stage is one for which liability insurance alone is expensive enough, let alone the payments on the car loan. In general, Americans are weird about talking about money; the majority avoid discussing it at all, so that you don’t know who has money in the bank and who is one flat tire away from defaulting on their mortgage, even though you have been friends for years. Then there are a few people out there whose conversation is full of empty boasts about purchases they plan to make in the near future, but they are oddly evasive about how they intend to pay for it. If you think talking to your friends and acquaintances about money is awkward, try talking to your family. The prospect of family members finding out about your financial struggles ranks highly on the list of adults’ worries about the holidays. The good news is that you do not have to be forthcoming about your financial situation with your children; it is your right to surprise them during probate about how much money you have and how much or how little of it they are inheriting. The even better news is that everyone wins when you give your younger family members cash gifts for Christmas. The recipients of the gifts do not have to know the details about how much more you can afford to give in subsequent years; that can stay between you and your Orlando estate planning lawyer.
Cash Gifts for the Holidays Are a Win-Win Situation
When you give away a large amount of cash as a gift, the IRS requires you to pay taxes on it. As for how much qualifies as a taxable large gift, it depends on the year. The annual gift tax exclusion is the maximum amount you can give to one recipient in one calendar year without your gift being subject to taxes. In 2023, you can give up to $17,000 per recipient, and in 2024, the maximum amount will be $18,000.
You can give gifts below the annual gift tax exclusion to as many recipients as you choose. Likewise, if you give one family member $17,000 this year, you can give the same recipient $18,000 next year and continue giving gifts for many more years. The lifetime limit on tax-free cash gifts is $6.2 million, which means that only the healthiest, wealthiest, and most generous among us ever have to worry about maxing it out.
Contact Gierach and Gierach About Holiday Generosity
An estate planning lawyer can help you give cash gifts that promote family unity, your financial wellbeing, and the financial wellbeing of the recipients. Contact Gierach and Gierach, P.A. in Orlando, Florida to discuss your case.
Source:
smartasset.com/estate-planning/gift-tax-explained-2021-exemption-and-rates
