It is important to know the gift tax limit when you are planning on providing gifts to your friends or family. When you make a gift, it is possible that this could trigger a tax. You need to know when and how you are taxed, and by whom, if you are planning on giving away money and property.
Giving strategic gifts during your lifetime could be an important part of your estate plan. It is also a nice thing to do if you have children or other friends or family members who you care about and want to provide for. Eghrari Wealth Training Law Firm can help you to learn the rules for gift taxes, including the gift tax limit, so you can be a generous giver without causing tax consequences.
What is the Gift Tax Limit in New York?
In the state of New York, there is no specific gift tax that is charged on gifts that you give. However, certain gifts are “includible” in your estate. That means that the value of the gift will be included when determining how large you estate is. Larger estates in New York can be subject to estate taxes, so adding the value of a gift back into your estate can make a difference on whether the entire estate is taxable or not.
The New York State Department of Taxation and Finance explains the rules for gift taxes within the state of New York. A gift may be countable as a part of your estate, and thus potentially subject to New York’s estate tax if:
- The gift was made within the three years prior to the date of your death.
- The gift wasn’t already included in your federal gross estate.
Gifts are not included in determining the value of your taxable estate for New York if you were not a resident of Nw York at the time you made the gift, or if the gift consists of tangible or real property that is located outside of the state of New York. If the gift was made prior to April 1, 2014, it is also not going to be counted as part of your taxable NY estate.
What is the Gift Tax Limit on the Federal Level?
While you may not have to worry about a state gift tax limit on most gifts if you live in New York, you do need to know the federal rules for giving gifts. The IRS can impose taxes in certain situations when you give away money or property, but you can likely avoid being taxed on gifts if you know the rules.
The IRS explains that there is an annual exclusion that applies to each gift recipient. As of 2017, the excludable amount is $14,000 per person per gift. This means that you can give each person you know up to $14,000 without triggering a gift tax. If you have two kids, you could give them each $14,000 and not be taxed. If you have a spouse, you and your spouse could each give $14,000 to each of your children. This would mean each child could get $28,000 as a gift each year when mom and dad combine their gift tax exclusions.
There are also other ways to exclude a gift you give. For example, no gift to your spouse is subject to gift taxes. There is no gift tax charged on gifts that you give to political organizations for their use. If you pay medical or tuition expenses directly (e.g. you send money directly to the hospital or to the college), you also do not have to pay any gift taxes no matter how large the gift is that is given.
With the many different exceptions to gift taxes, it is generally possible to give away a lot of money during your lifetime without it being taxed. Eghrari Wealth Training Law Firm can assist you in making smart choices about giving so you can effectively provide for your loved ones without giving a big part of your wealth to the government.
Getting Help from A Long Island Tax Planning Lawyer
Eghrari Wealth Training Law Firm can offer you assistance in making financial gifts without triggering taxes. We can also assist you in determining how strategic gifting can help you to avoid estate tax and protect your wealth. To learn more about how making gifts can fit into an estate plan, join us for a free seminar. You can also give us a call at (631) 265-0599 or contact us online to get personalized advice on your estate plan and on y our gifting plans.