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
Understanding Portability for Estate and Gift Tax
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer
How Can Trusts Be Used in Business Succession?
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Author: George McGowan
Read Before You Sign: IT Contract Pitfalls Every NJ Business Should Know
In today’s digital economy, New Jersey businesses of all sizes rely heavily on technology vendors, software providers, cloud platforms, and managed IT services. Whether your company is purchasing software, migrating data to the cloud, engaging a cybersecurity consultant, or entering into a long-term managed services agreement, a careful IT contract review can have significant operational, […]
Author: George McGowan
New York NDA Requirements for Businesses
Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
Author: Dan Brecher
New Jersey Will Contest Grounds Explained
How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]
Author: Marc J. Comer
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.