Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 07-11-2013, 02:22 PM
alessandra
 
Posts: n/a
gift tax

I have a question about gift taxes.

My understanding of the lifetime exemption is that a person can give $5.25 million in total in their lifetime without paying taxes on it.

However the person who is going to be giving me the gift says that that amount relates to inheritance only. They've said: "That's inheritance. The donor has to die. Its 14k per year per donor tax free."

Can you please clarify how the gift tax works and if it only applies after the donor dies.

Thank you.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 07-12-2013, 05:48 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by alessandra View Post
I have a question about gift taxes.

#1;My understanding of the lifetime exemption is that a person can give $5.25 million in total in their lifetime without paying taxes on it.

#2;However the person who is going to be giving me the gift says that that amount relates to inheritance only. They've said: "That's inheritance. The donor has to die. Its 14k per year per donor tax free."

#3;Can you please clarify how the gift tax works and if it only applies after the donor dies.

Thank you.
#1:Correct due to the presence of Unified estate and gift tax credit, $1,772,800 for 2012. The unified credit on the basic exclusion amount for 2012 is $1,772,800 for 2012 (exempting $5,120,000 from tax), $5.25 million for 2013 after Annual Gift Tax Exclusion , $14K for 2013,subtraction.However, for estate tax purposes, on Form 706 all the decedent's taxable gifts made after 1976 are added to the gross estate. This is then adjusted by lowering the total estate tax by the amount of gift taxes that would have been due if the gifts had all been made in the year of death.





#2:Inheritance is NOT a gift; Inheritance is the practice of passing on property, titles, debts, rights and obligations upon the death of an individual. As long as you recive money from the person decids to give it to you now, then, this is a gift.

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead;$28K as long the donor or his spouse makes a gift to you, the gift can be considered as made one-half by him and one-half by his spouse. Currently, the person generally can give gifts valued up to $14K per person, to any number of people, and none of the gifts will be taxable.
However, gifts of future interests cannot be excluded under the annual exclusion. A gift of a future interest is a gift that is limited so that its use, possession, or enjoyment will begin at some point in the future.





#3; It depends, as long as the amount of their cumulative gifts exceeds $5.25 million for 2013, then they need to pay gift tax on the amount exceeding $5.25 million. In general, you are NOT subject to the gift tax as a done.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Tax on Gift from parents thmpr52 Miscellaneous 1 06-04-2013 03:15 PM
Stock Gift jjjones4180 S-Corporation 1 09-14-2012 10:11 PM
stock as a gift abbottstownkid Miscellaneous 2 04-10-2012 11:43 AM
Federal Gift Tax kfuchslin Estate Planning 0 02-16-2010 03:33 PM
gift tax exclusion Rich Mort Estate Planning 0 01-04-2009 06:57 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.