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
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Author: Sean M. Pena
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
Author: Donald M. Pepe
Are Your Conversations with AI Shielded from Discovery? Courts Are Split
Whether a client’s prompts to a generative AI tool and the documents it produces are protected from disclosure depends on the case type, who claims protection, and whether counsel was involved. In United States v. Heppner, a New York federal judge ruled that a criminal defendant’s communications with an AI platform were protected by neither […]
Author: Chris Seelinger
Guardianships in New Jersey: When a Loved One Can No Longer Manage Personal or Financial Affairs
When a family member can no longer make important decisions for themself, the question is often not whether the family will step in, but whether they have the legal authority to do so. A spouse may manage household finances, or an adult child may arrange medical care and pay bills. Still, informal assistance does not […]
Author: Marc J. Comer
New Jersey’s Revised UHAC Regulations: What Residential Developers Need to Know About Affordable Housing Commitments
New Jersey residential developers with affordable housing obligations should carefully review their existing approvals, development agreements, and proposed deed restrictions in light of the State’s revised UHAC regulations (Uniform Housing Affordability Controls). The regulations, which took effect on November 6, 2025, significantly change the administration and physical requirements for affordable housing units. For developers with […]
Author: Wendy Rubinstein Quiroga
“No Comment” Culture: Why Silence Is Often the Riskiest Legal Strategy
A “no comment” response is sometimes the right call when a legal problem arises. As a blanket policy, however, it lets allegations go unanswered, deadlines pass, evidence disappear, and manageable disputes grow into expensive litigation. The businesses that fare best are usually the ones that say little publicly while acting decisively behind the scenes. When […]
Author: Sean M. Pena
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.