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
Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand
Owning a residential rental property in New Jersey involves more than finding tenants and collecting rent. Property owners must comply with a combination of state laws, municipal ordinances, building and housing codes, and zoning and land use regulations. These requirements can affect everything from the number of dwelling units permitted at a property to whether […]
Author: Donald M. Pepe
Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them
The five most common real estate disputes are breach of contract claims, landlord-tenant conflicts, zoning and land use disagreements, construction claims, and boundary disputes. Understanding why each arises, and taking preventive steps early, can help property owners, tenants, developers, and investors avoid costly litigation. Key Takeaways: Real estate transactions are complex endeavors involving numerous parties […]
Author: Paul Grossman
When a Child Turns 18: The Gap in Your Family’s Estate Plan
Once a child turns 18, parents lose the automatic legal authority to make medical and financial decisions on their behalf, even if the child still lives at home or remains on the family’s insurance. Three documents close that gap: a durable power of attorney, a health care proxy or directive, and a HIPAA authorization. For […]
Author: George McGowan
Business Mediation: An Overview and Practical Tips
Business mediation is a confidential, voluntary process in which a neutral third party helps companies negotiate a resolution to a commercial dispute without going to trial. Because working with a mediator is very different from litigating in the courtroom, it is important to understand how commercial mediation works, when it makes sense for your dispute, […]
Author: Paul Grossman
Top 5 Causes Leading to Construction Defect Litigation
The five most common causes of construction defect litigation are design defects, substandard materials, workmanship defects, code violations, and subsurface defects. Because these flaws can compromise a building’s integrity, functionality, or safety, they frequently lead to disputes involving multiple parties and high financial stakes. Key takeaways: What is Construction Defect Litigation? Construction litigation is complex, […]
Author: Paul Grossman
How to Protect Your New Jersey Business When Going through a Divorce
The most effective ways to protect your business in a divorce are put in place before one begins: a prenuptial or postnuptial agreement, clean separation of business and personal finances, and divorce contingencies built into your operating or buy-sell agreements. If divorce is already underway, the priorities shift to establishing how the business is classified […]
Author: Jay McDaniel
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.