Important Taxable Gift Information

Tuesday, August 11, 2015
Summertime is the perfect time to start assessing your tax situation for the following tax season. At this time, you can determine if your charitable gift is taxable.  Basically, if you gifted money or property to anyone, then you may qualify for the federal gift tax. There are rules and guidelines for what qualifies for a taxable gift and many gifts are not subject to the gift tax.

We are the Strategic Tax Lawyers, and we are tax lawyers in California. As tax lawyers in California, we have clients who are very generous and are able to give charitable gifts.  Here are some legal tax tips about gift tax.

The general rule for charitable gift giving is that any gift is a taxable gift.  However, there are always exceptions to this rule. There are gifts that are not considered taxable gifts which include (1) gifts that do not exceed the annual exclusion each year; (2) tuition or medical expenses that are paid directly for someone else; (3) gifts to your spouse who you are lawfully married to; (4) gifts for political organizations; and (4) gifts to charities.  

There are also annual exclusions since most gifts are not subject to the gift tax.  For example, suppose you purchase a gift to your spouse or to a charity, that gift is not subject to the gift tax. However, if you purchase for another person, the gift tax will not apply unless the gift’s value exceeds the annual exclusion for the year.  The annual exclusion is approximately $14,000.   Also the person who receives the gift does not have to pay taxes, such as income tax or gift tax on the value of the gift received.

In general, if you make a gift, it usually will not affect your income tax. The value of gifts cannot be deducted.  The exception is charitable contributions.  In addition, the gift tax can apply when you forgive a debt or make a loan that is interest-free or below the market interest rate.  If you and your spouse split a gift, you can spend up to $28,000 without making it a taxable gift.  Form 709 will need to be filled out and included with your tax return.

Are you looking for a tax lawyer in California? The Strategic Tax Lawyers, LLP are a firm of tax lawyers in California that are experts in tax code with years of experience dealing with the IRS and tax-related matters.   Call the Strategic Tax Lawyers at (800) 669-4775 for a free consultation to assist you with your tax-related matters.