James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comFirm Insights
Understanding the Perks, Exclusions of the Gift Tax Law
Author: James F. McDonough
Date: July 29, 2013
Key Contacts
Back
The gift tax law is a popular strategy used by individuals and business owners of all income levels to reduce their taxable estate and pass on wealth, property, and assets to future generations. While most people may know the basics of the gift tax law, many may not be aware of the fine details that may impact their tax and estate planning decisions.
In a recent Wall Street Journal column, an individual wrote in expressing confusion over the limitations and exclusions associated with the gift tax law. One of the most common misperceptions about the rule is that the gift tax exclusion only applies when gifts are passed down to children or spouses. In actuality, the Internal Revenue Service allows a person to extend gifts of up to $14,000 to whomever they wish in 2013. This number doubles to $28,000 for married couples filing jointly. This means that a person or couple may extend gifts up to that limit to children, siblings, neighbors, friends, parents, or even strangers without facing tax liabilities. Further, individuals may give these gifts up to as many people as they wish. Typically, gifts given between spouses are tax-free.
In addition, there are a number of gifts that are excluded from the annual limit. For instance, a person may pay for the medical expenses or school tuition of anyone they wish without coming under the limitations of the gift tax law. This means that parents who pay for the tuition of their children – even if the amount exceeds $28,000 – will not be required to pay taxes on any funds that exceed the annual threshold.
Understanding these details can help parents, business owners and individuals make more informed decisions about how to extend financing or gifts to loved ones and help ensure that they don’t face any tax surprises in the future.
- Practices: Sophisticated Estate Planning & Wealth Preservation, Tax and Trusts & Estates, Estate & Trust Litigation, Real Property Tax Strategies
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Commercial Real Estate Trends to Watch in 2026
Commercial real estate trends in 2026 are being shaped by shifting economic conditions, technological innovation, and evolving tenant demands. As the market adjusts to changing interest rates, capital flows, and workplace models, investors, owners, tenants, and developers must understand how these trends are influencing opportunities and risk in the year ahead. Overall Outlook for Commercial […]
Author: Michael J. Willner
One Big Beautiful Bill: New Tip Income Tax Rules Employers & Workers Need to Know
Part 2 – Tips Excluded from Income Certain employees and independent contractors may be eligible to deduct tips from their income for tax years 2025 through 2028 under provisions included in the One Big Beautiful Bill. The deduction is capped at $25,000 per year and begins to phase out at $150,000 of modified adjusted gross […]
Author: Scott H. Novak
One Big Beautiful Bill: New Overtime Tax Rules Employers and Employees Need to Know
Part 1 – Overtime Pay and Income Tax Treatment Overview This Firm Insights post summarizes one provision of the “One Big Beautiful Bill” related to the tax treatment of overtime compensation and related employer wage reporting obligations. Overtime Pay and Employee Tax Treatment The Fair Labor Standards Act (FLSA) generally requires that overtime be paid […]
Author: Scott H. Novak
New York’s FAIR Business Practices Act: What the New Consumer Protection Measure Means for Your Business
In 2025, New York enacted one of the most consequential updates to its consumer protection framework in decades. The Fostering Affordability and Integrity through Reasonable Business Practices Act (FAIR Act) significantly expands the scope and strength of New York’s long-standing consumer protection statute, General Business Law § 349, and alters the compliance landscape for New York […]
Author: Dan Brecher
How to Reduce Legal Risk as Your New Jersey Business Grows in 2026
For many New Jersey businesses, growth is a primary objective for the New Year. However, it is important to recognize that growth involves both opportunity and risk. For example, business expansion often results in complex contracts, an increased workforce, new regulatory requirements, and heightened exposure to disputes. Without proactive planning, even routine growth can lead […]
Author: Ken Hollenbeck
Crypto Investor Protection: SEC and CFTC Enforcement Trends
Crypto investor protection continues to evolve, with the SEC and CFTC investing resources and coordinating more closely to uphold regulatory standards. Whether you’re a retail investor, an institutional trader, or part of a crypto startup, understanding enforcement trends is essential for navigating this dynamic and high-stakes regulatory environment. Crypto Is No Longer the Wild West […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.