You still have time for tax-free gift giving
December 31 is the last day you can take advantage of this year's annual gift tax exclusion. The exclusion is the amount you can give away each year without triggering gift tax. For 2016, the exclusion is $14,000 per recipient. If you and your spouse "split" your gifts, you can give up to $28,000. Here's what you need to know.
* All gifts during the year, including birthday and holiday presents, count toward the $14,000 (or $28,000) annual gift tax exclusion. For example, say you give a $500 birthday present to your grandchild. You can give that grandchild up to an additional $13,500 without triggering the requirement to file a gift tax return.
* A gift made by check to an individual isn't complete until the recipient actually deposits or cashes the check. Plan accordingly when making year-end gifts.
* For a gift to be valid, you must transfer ownership. Pay special attention to gifts of stock in the family business or gifts of your personal residence.
* Certain gifts are exempt from the $14,000 limit. You can make unlimited gifts for tuition expenses or medical expenses, provided you present the payments directly to the educational institution or health care provider. Generally, you can also make unlimited gifts to your spouse.
To discuss how making tax-free gifts can be part of your estate planning, please contact our office.