In this Elder Law Minute, Wes Coulson discusses a common misconception regarding gift tax
Transcript:
I want in this video to clear up a very common misconception about gift tax. I can’t count the number of times that I’ve had people say, “well, I can’t give away more than $10,000 a year,” which by the that number is now $15,000 as of 2020, “because there would be a gift tax.”
Well, that is crazily far from being the truth. Here is the truth:
There are two exemptions that apply that cause there not to be a gift tax. One is that annual per donor, which is the person who gives it to recipient, exemption. But on top of that, what people know as the estate tax exemption, which is now a little over $12.5 million dollars, is actually the unified estate and gift tax exemption.
What that really means is that either during your lifetime or when you die, you can give away $12.5 million dollars worth of stuff without incurring a tax. If it’s a large gift, you want to probably tell the IRS, via tax return, that you’re using part of the exemption.
But if people are not making gifts, or they’re restricting gifts because they think that this minuscule, or relatively minuscule when we’re talking about $12.5 million dollars, gift tax exemption is the only thing that exists, that’s just a mistake and don’t let anyone tell you otherwise.
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