Everyone needs to consider how much to leave to their heirs after passing away. Although it seems like a simple transfer of assets, estate planning becomes complicated quickly. There exists a gift tax placed on the transfer of property or money to another person by which the giver receives nothing in return.
There are exclusions to this rule. You can give up to a certain amount to a loved one and not have to pay taxes on it. A lot of people will not have to worry about paying such taxes unless they plan on giving away an extraordinary amount of money. However, so you stay on the right side of the law, it helps immensely to familiarize yourself with tax annual exclusions.
The exclusion remains the same for 2019 as 2018
In 2018, the annual tax exclusion was $15,000. That number remains the same for this year. That means you can give up to $15,000 to an individual as a gift and not pay any taxes on it. For a married couple, that number doubles. Therefore, a couple could give up to $30,000 to an adult child. This limit applies to each individual instance. That means a couple could give $30,000 to each of their children, with the total exceeding six digits, and none of them would have to pay taxes on it.
Giving more than $15,000 as a gift
In the event that you want to give more than $15,000 as a gift to a loved one, then you need to file a gift tax return. You would need to file Form 709 with the IRS. You may still not have to pay any taxes, but you do need to inform the IRS of the gift. There is also the lifetime gift exclusion to be aware of. In 2019, the IRS raised this limit to $11.4 million, which is an increase from $11.2 million from the previous year. Gifts between spouses remain unlimited.