FAQ Friday: Gift tax returns

On Friday, October 7th Mr. Berger discusses Gift Tax Returns - When would I need to file one?

There is an annual limit for gifts without filing a tax return. Right now the limit is $15,000. It only bumps up by $1,000 at a time.

A husband and wife could give up to $30,000 to one child, but they would need to make their gifts in half separately to avoid needing to file the return.

You won’t need to pay any gift tax unless you gift over $12 million, sixty thousand dollars, though a return would still be needed for over $15,000. There is also no gift tax in Maryland, but there is inheritance tax when you give to a non exempt person.

If you use property to gift, you are giving away the fair market value.

There are gray areas when there are incomplete gifts. If mom puts daughter on her bank account and she only spends money on mom. In this situation there is no gift.

Joint titles on real estate. Ownership of bank account with mom and if daughter shares proceeds to brother then she will need to file a gift tax return unless it is given out annually under the threshold.

If there is a family business and say 20% is given to your son which is worth $200,000. The IRS often discounts that as the minority interest on average 25%.

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