Give…And Keep It "All In The Family"

Individuals may give up to $13,000 per year to an unlimited number of people.  This is known as the annual exclusion. A married couple could give up to $26,000 per year to an unlimited number of people.  If the gift is under these amounts, no gift tax returns need to be filed and no gift tax needs to be paid.

Gifts over $13,000 to one person will require a filing.  A gift tax, however, is typically not paid as this amount uses up part of your estate tax exclusion when you pass away.  In 2009 there is an estate tax exclusion of $3.5 million dollars.  Done correctly, married couples can exclude up to $7 million dollars from estate tax.

In addition to the annual exclusion, there is an additional exclusion for qualified medical and educational expenses paid.  Qualifying expenses for higher education are for payments made directly to the educational institution for tuition.  Qualifying medical expenses include deductible medical expenses that aren't reimbursed by insurance.  The key to obtaining these additional exclusions is to make the payment directly to the educational institution or the medical provider.

ACTION ITEM:  Looking to help out your children or other family members?  In 2009, you can gift of up to $13,000 per recipient without having to file gift tax returns or pay gift taxes.  Also, gifts for qualified educational and medical expenses do not require filing gift tax forms or paying gift tax.  Give now…and keep it "all in the family."

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