How Much Money Can You Gift Tax Free 2017
[ad_1]
How Much Money Can You Gift Tax-Free in 2017?
Gifting money to family and friends is a common practice, especially during special occasions and holidays. However, it’s important to understand the tax implications that may arise from these monetary gifts. The Internal Revenue Service (IRS) imposes taxes on gifts above a certain threshold, but fortunately, there are exceptions and exclusions that allow you to gift money tax-free. In this article, we will explore the guidelines for tax-free gifting in 2017 and answer some frequently asked questions on the subject.
The annual exclusion for tax-free gifts in 2017 is $14,000 per recipient. This means that you can gift up to $14,000 to any individual without incurring any gift tax. The limit applies to both cash gifts and the fair market value of any property or assets given away.
It’s important to note that the $14,000 limit is per recipient, not per giver. This means that if you are married, you and your spouse can jointly gift up to $28,000 to an individual without triggering the gift tax. However, if you exceed this limit, you will need to file a gift tax return, Form 709, with the IRS. This return does not necessarily mean you will owe taxes; it is primarily used for tracking and monitoring your lifetime gift tax exemption.
The lifetime gift tax exemption for 2017 is $5.49 million. This exemption applies to the cumulative value of all taxable gifts made during your lifetime, above and beyond the annual exclusion limit. If your total lifetime gifts exceed this amount, you will owe gift tax on the excess. The gift tax rate ranges from 18% to 40%, depending on the value of the gift.
FAQs:
Q1: Can I gift more than $14,000 per year tax-free?
A1: Yes, you can gift more than $14,000 per year tax-free, but you will need to file a gift tax return and it will count towards your lifetime gift tax exemption.
Q2: Can I gift money to my spouse tax-free?
A2: Yes, gifts between spouses are generally tax-free, regardless of the amount. However, if your spouse is not a U.S. citizen, the annual exclusion limit is reduced to $157,000 in 2017.
Q3: Are there any exceptions to the annual gift tax exclusion?
A3: Yes, there are certain types of gifts that are excluded from the annual limit. These include payments made directly to educational institutions for tuition or medical expenses paid directly to healthcare providers.
Q4: Are gifts to charity tax-deductible?
A4: Yes, gifts to qualifying charities are tax-deductible. However, these gifts do not count towards the annual exclusion limit as they fall under different tax provisions.
Q5: Can I gift property or assets instead of cash?
A5: Yes, you can gift property or assets instead of cash, but their fair market value will be counted towards the annual exclusion limit.
Q6: Do I need to report tax-free gifts on my income tax return?
A6: No, tax-free gifts do not need to be reported on your income tax return.
Q7: Can I use the annual exclusion and lifetime exemption together?
A7: Yes, you can use the annual exclusion and lifetime exemption together. For example, if you gift $20,000 to an individual, $14,000 will be covered by the annual exclusion and the remaining $6,000 will be deducted from your lifetime exemption.
In conclusion, the annual exclusion for tax-free gifts in 2017 is $14,000 per recipient, which can be doubled to $28,000 for married couples. Gifts exceeding this limit may require the filing of a gift tax return, but the actual tax liability will depend on the total value of cumulative gifts made during your lifetime. Understanding the rules and limitations around tax-free gifting is crucial to avoid unnecessary tax obligations and ensure a smooth gifting process.
[ad_2]