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Ways To Give More Without Exceeding The Annual Gift-Tax Exclusion

Sunday, July 8, 2012 - 4:43 AM
The IRS rules say "you generally can give gifts valued up to $13,000 per person, to any number of people, and none of the gifts will be taxable." This Wall Street Journal article has one interesting way to go above this by paying for the medical and tuition expenses of the recipient but the payments must be made directly to the providers.
4
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,743
1. Sunday, July 8, 2012 - 6:42 AM
I believe the annual limit applies to reporting. A person can gift well above $13,000/yr without paying tax; one must just file a report, and then there is the "lifetime" limit before tax kicks in.  Last I checked it was a million bucks.

What gripes me is that reporting requirement. Except for extreme "Daddy Warbucks" types, who gifts more than a million? We gifted our daughter slightly in excess of the annual amount (to help her buy a house) and had to file gift tax returns (an oxymoron, since we didn't owe any gift tax). Cost us $300 to the accountant ($150/return X 2). I was not happy. The $300 to the accountant was our "gift tax."
5
BozoBozo135 posts since
Feb 14, 2011
Rep Points: 917
2. Monday, July 9, 2012 - 3:00 AM
Actually, in 2012, the lifetime exclusion is $5,200,000. With the expiration of the extension of the Bush tax cuts, it falls to $1 million in 2013. So if you're going to kick the bucket, do it in 2012. :)
2
loulou521 posts since
Aug 3, 2010
Rep Points: 3,239
3. Monday, July 9, 2012 - 7:48 AM
The "paid directly to the Provider" when it comes to medical bills brings a question.  If you are paying an adult child's bills including their credit card and their medical bills are charged to their card but you pay the credit card every month with "your" check, is that the same as "paid directly to the Provider"?  Must each medical provider bill be on our check to them?  Thanks for any info you can provide.
1
paoli2paoli21,148 posts since
Aug 10, 2011
Rep Points: 5,122
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