Wednesday, March 02, 2011

NEET Tips

NEET Tips answers questions posed online to the NEET website

What are some creative ways to get around the gift tax?

With the reunification of the estate and gift tax rates, an individual may, under current law, give $5 million in lifetime gifts (a married couple may give $10 million) before gift taxes become due. Few people need to exceed that amount, but if you see a need to give more, or you don’t want to reduce your estate tax exemption amount, here are some opportunities in the existing gift tax laws that allow substantial tax-free gift giving to family members, friends and charitable organizations.

First, consider the annual gift tax exclusion amount of $13,000 per person, to any number of people you choose. Couples may give $26,000, and if a couple is making gifts to a child and spouse, the amount doubles to $52,000 per year.

Second, consider the gift tax exclusion for education and medical payments made directly to the provider. You can give an unlimited amount of qualified payments for tuition and medical expenses, including medical insurance.

Third, consider gifts to public charities or private foundations.

Fourth, if married, consider making gifts to your spouse. You might consider this if your property is separately owned, and one spouse’s net worth is below the Vermont or federal estate tax exemption amount, while the other spouse’s exceeds the state or federal exemption amount and thus would be subject to tax if they were the surviving spouse.

For more information on making gifts, see the NEET articles:

Giving Gifts

Creative Ways to Pay for Education