Foolish statement. It won't be taxable towards the GIVER'S estate tax credit, but it WILL be taxable towards the recipient.
"A person can gift fairly large amounts annually without affecting the unified credit. Basically, any US taxpayer can gift up to $11,000 to a single person in a tax year and there are no tax consequences: the gift giver's lifetime unified credit is not affected, and the gift recipient pays no tax."
actually as long as the gift is 11k or under from one source or 22K or under from a joint spouse gifting to said recipient then it is not taxable to the recipient nor does it deduct from the lifetime bulk giving allowance of the gifter.
You may give 11k to an infinite number of DIFFERENT people per year if you like and none of them will pay any tax on said gift.
and it does not come off your lifetime credit allowance for estate purposes....which is around 1.5 million this year and the death tax on excess estate is now about 47%
It all phases out in 2010....a good year to die if you like your heirs...lol
but then comes back the next year.
I look for W to make this permanent.
You know not of what you write. A gift is never taxable to the recipient (even a billion dollars). A gift tax is only payable by the giver.
"In the fwiw department, the IRS says you can send anyone a gift up to $11,000, and not be taxable."
"Foolish statement. It won't be taxable towards the GIVER'S estate tax credit, but it WILL be taxable towards the recipient."
Your response doesn't seem correct. A few years ago my grandmother was sick and trying to get her estate under 475,000.00 for tax reasons. She gifted 10,000.00 each to myself, my two siblings, my father, and my uncle. None of us had to pay taxes on the 10,000.00.
That said, I don't think this situation qualifies for the 11,000.00 gift tax exclusion.
http://www.irs.gov/businesses/small/article/0,,id=108139,00.html
Q: What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.
Q: What can be excluded from gifts?
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.
1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
3. Gifts to your spouse.
4. Gifts to a political organization for its use.
In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.
Q: May I deduct gifts on my income tax return?
Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions). If you are not sure whether the gift tax or the estate tax applies to your situation, refer to Publication 950, Introduction to Estate and Gift Taxes.
Q: How many annual exclusions are available?
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002, 2003 or 2004, the annual exclusion applies to each gift.
From the tax code...
If you gave any one person gifts valued at more than $11,000 in 2003, it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift.
The person who received your gift does not have to report the gift to the IRS or pay either gift or income tax on its value.
You make a gift when you give property (including money), or the use or income from property, without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift.
For easy reference check...
IRS Publication 17, Your Federal Income Tax
IRS Publication 575, Pensions and Annuity Income
and
IRS Publication 590, Individual Retirement Arrangements (IRAs) for gifts to individuals.
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