The Rules is Gifting - A Thread
 
1. ‘Tis the season to be gifting; so, let’s cover some of the rules. Later, we’ll explore some gifting vehicles, followed by a few strategies.

2. The Rules:
 
The good news is that most gifts made and received throughout our lifetimes are within the IRS ‘rules.’  When gifts exceed a certain amount in a calendar year, the IRS expects (*REQUIRES) Form 709 to be included with that year’s tax return. What’s the amount?

3. The annual gift exclusion is $15,000 for individuals and doubled to $30,000 for married couples. This amount has gradually increased over the years to account for inflation, but it will not change for 2021.

4. The exclusion is per recipient and there are no limits on how many recipients one may give to. Money/assets transferred amongst spouses does not break the rules - there are no gift limits between married couples, as long as both are US citizens.

5. Lloyd Christmas in front of the Aspen hotel:  Form 709 is not required.

6. Folks in Lexus commercials (if you can’t spot wedding bands):  Form 709 is required.

7. What about adult children or aging parents? Neither are excluded, so all family support in excess of $15k would require a gift tax return to be filed. What happens when a gift exceeds the annual limit? Is everybody paying a gift tax?

8. Short answer, no. When gifts go above $15k in a year, the donor can tap into their ‘lifetime exemption.’  The current lifetime gift exemption is $11.58 million for individuals and $23.16 million for married couples. This will be increased to $11.7/$23.4 million for 2021.

9. This is always something worth keeping an eye on. While 99.99% of Americans fall under the current exemption, that may not be the case in the future. This figure was $2 million in 2008 and will change as our politicians cycle in-and-out.

10. Now that we know the basic rules of gifting, we can explore how to use them to our advantage.  Next up, The Vehicles of Gifting…