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(Part of a series of articles on charitable giving and the Union County Foundation by David Vollrath - Exec. Dir.) Arguably one of the simplest and most consumer beneficial provisions of our otherwise over complicated tax code is the annual gift tax exclusion. This is the provision that allows you to "gift" cash or assets up to $12000 per year (previously $11000) to as many people as you wish. Those receiving the gift need not be relatives or family members; they can be anybody. The gift giver need not file a gift tax return and the gift receiver need not treat the gift as income. Additional good news is that as long as the annual gift does not exceed the new $12000 ceiling the gift(s) do not decrease the gift giver’s $1 million dollar lifetime gift tax exemption. As you can imagine this annual gift tax exclusion is a wonderful way to transfer assets to family members or loved ones without tax implications. This exclusion is one of several basic provisions in our tax code that encourages Americans to engage in charitable activity (even if that act of charity is directed towards family members). There are several provisions of the annual gift exclusion that you might consider. If you and your wife elect to combine your gift exclusions ($12000 each) you can in essence gift up to $24000 per year to any individual, without tax consequences. If a husband and wife time their gifts by completing one gift at the very end of the year and the next year’s gift at the very beginning of the year, they could actually in essence gift $48000 to any individual within a very short time frame. Also the qualifying $12000 annual gifts to your grand children, nieces, or nephews are not subject to Generation Skipping Transfer Tax or estate taxes. One other provision of our tax code allows for excludable gifts for tuition and healthcare. This exclusion is in addition to the $12000 annual exclusion discussed above. What this means is that any individual can pay school tuition and medical care on behalf of any other individual (relative or otherwise) with no resulting tax implications. The caveat is that the payments must be made directly to the medical care provider or learning institution. Being aware of these tax code provisions is an important piece of forming a complete charitable giving and estate plan. The Union County Foundation encourages you to work closely with your professional tax and estate planning advisor(s) as you consider your present and future charitable goals. The Foundation is equipped to help you achieve these goals by providing: planned giving and estate planning resource information, charitable gift annuities/life income plans, and a broad array of charitable choices. Please call us at 937-642-9618, email commfounduc@imetweb.net, reference our website at www.emarysville.com/unioncountyfoundation, or stop by our Marysville office at 126 N. Main St. We are committed to helping you.... “preserve your footprint in time.” |
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