gift tax consequences

Thanks to relatively low rates of inflation, its taken five years for the annual exclusion amount to increase.
But the overall gifted amount will reduce the amount of exemption you have left to shield your estate from.
For instance, suppose an unmarried individual gives gifts to family members valued at 1,150,000 in 2018.
The only person you can give a gift to that is exempt from the gift tax is your spouse.The donor and the amount of tax due is based on the value of their gift.Individual Income Tax Return) to obtain a tax extension for your 1040 return, you will automatically receive an extension for Form 709.The tcja expires at the end of 2025 unless Congress acts to renew its provisions.There is no limit to the number of recipients you can give a gift.If you go over those limits, you will have to pay a tax on the amount of gifts that are over the limit.If youre married, you and your spouse can each gift up to 15,000 to any one recipient.What constitutes a gift that counts toward your gift tax limit is generally easy to understand.Section 529 Plans: Make Five Years of Gifts in a Year.You can skirt the gift tax by contributing to someones 529 college savings plan with a lump sum and then spreading it over five years for tax purposes.Most gifts are sheltered from gift tax by the annual gift tax exclusion and the lifetime gift tax exemption (or both).
Consult with an accountant or an estate planning attorney if you're about to make a significant taxable gift.
So, in the previous example, a married couple with ten family members could gift up to 280,000 in 2017 (300,000 in 2018) completely exempt from gift tax.
For example, you may arrange to give five family members gifts totaling 70,000 (14,000 x 5) in 2017 and 75,000 (15,000 x 5) in 2018.In general, you must file a Federal gift tax return (IRS Form 709) if you gave someone more than 14,000 during the year.Melissa Ross/Moment/Getty Images, by, julie Garber, updated July 07, 2018.A recipient will only pay gift tax in special circumstances where he or she has elected to pay it through an agreement with the donor.Normally, a gift made directly to a family member to pay for college education costs would be covered by the annual gift tax exclusion, up to the limit of 14,000 in 2017 (15,000 in 2018).If you dont have a plan yet, consider talking to a financial advisor.There are several things that the IRS doesnt consider a gift, however.529 plan, the tax law allows you to make a one-time contribution thats effectively treated as if its made over five years for gift tax purposes.You can also give your son a car worth 15,000 in 2018.Then you will have made a taxable gift to your daughter equal to 105,000 in 2018120,000 less the 15,000 annual exclusion.