You may need to pay an additional Gift Tax on money you have given as a gift in 2018 it if it succeeds $15,000.00. However, you may not have to pay tax, depending on how much you have already gifted away over the course of your life. How much you gift will also affect how much of your estate can be distributed from the federal estate tax free when you die.
Gift Taxes is defined by the IRS as “any transfer of value to an individual, either directly or indirectly, where nothing has been received in return.” In other words, if you write a big check or give a car to someone other than your spouse or dependent, you have made a gift. There is a gift tax limit for the amount you can give each year and for what you can give over the course of your life. If you succeed those limits, you will have to pay a tax on the amount of gifts that are over the limit. This tax is called “The Gift Tax”.
The annual gift tax exclusion is $15,000 for the 2018 tax year. This is the amount of money that you can give as a gift to one person, in any given year, without having to pay any gift tax.
The annual gift exclusion limit applies on a per-recipient basis. This gift tax limit isn’t a cap on the total sum of all your gifts for the year. You can make individual $15,000 gifts to as many people as you want. You just cannot gift any one recipient more than $15,000 within one year. If you’re married, you and your spouse can each gift up to $15,000 to any one recipient. In addition, if the recipient is married, you may gift up to $15,000 to each spouse.
If you gift more than the current exclusion to a recipient, you will need to file a special tax form to disclose those gifts to the IRS in great detail. You may also have to pay taxes on it. If that’s the case, the tax rates range from 18% up to 40%. However, you won’t have to pay any taxes as long as you haven’t hit the lifetime gift tax exemption.
If you or someone you know needs help with business tax preparation or Tax Liability issue now would be a great time to come in and let us help you resolve the issue. I can be contacted at (212) 320-8191 or by email at firstname.lastname@example.org.
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