Have a question about the federal gift tax.

[Garion_55]

The lifetime exemption from paying the gift tax intersects with another annual exemption. The annual exemption allows you to make gifts of up to $14,000 per year per person tax-free as of 2017. These gifts don't count against your $5.49 million lifetime exclusion. The lifetime exclusion only kicks in when you exceed this amount.




so you can give someone 100k and 14k of that isnt taxed? 86k is taxed?

and does anyone know what the tax rate on an 86k gift would end up being? how much would the feds take of that 86k?

thank you for your time.

[Sgent]

1. I'll start from the beginning

You have a 5.49 million dollar unified lifetime exemption for gifts and inheritance taxes. In addition you can gift 14k to a person each year without it being subject to gift tax (not the case with estate taxes). Between married couples, there is no gift / estate tax. So in your example:

100k
-14k
--------
86k

So you have to file a gift tax return which eats into your 5.49 million lifetime exemption. 5.49 - .86 = 4.63m left.

If when you die, you have 5m in assets then 5m - 4.63m = 370,000 over the exemption. You will owe 55% tax on the 370k.

You don't pay any gift / estate tax until your unified lifetime exemption is used up, then its 55% on the amount above the exemption.

[TexasBushwhacker]

2. I thought it was 40% n/t

[Sgent]

3. Your right

I was thinking of the former rate, it was lowered by Obama / R congress. It's a progressive rate going from 18% - 30% on the first 100,000k, and eventually up to 40% on amounts more than 1m over the credit.

[Garion_55]

4. thank you!!!

i think i get it now that helps!

[sinkingfeeling]

5. You can send my $14K via mail.

[MineralMan]

6. There used to be a one-time exemption for $100K

I don't know if that gift tax exemption still exists though. My ex-wife's father did that for her in the 70s. It may still be around in some form.

[Ms. Toad]

7. Note: The recipient does not pay ANY tax. The tax is paid by the donor.

(Or from the donor's estate).

So if you give $100,000 to someone none of the money is taken from the recipient. (I.e. nothing is taken from the 86K)

When you, as the gift giver, run past the lifetime exemption, then YOU pay taxes on the excess you gave away.

[TexasBushwhacker]

8. Correct. My boss wanted to put his mistress on our payroll

to avoid having to pay the gift tax. He was paying her about $10K a month, plus sinking about $200K into her "business". It was at the end of 2015. I told him it would mean paying the employer's portion of FICA and asked if she was prepared to pay her portion of FICA plus her income tax when it was due. He said "Probably not".

But then she broke up with him and he dropped dead of a heart attack.



His business partner told his grown sons about the mistress so they could keep her from trying to shake down his widow. One of them said "That's okay. I already knew my dad was an asshole."