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Gifting Before Year End

If you have substantial assets, you may want to consider making a gift before the end of the year. The annual gift exclusion does not carry over into the next year, so you will lose your annual exclusion if you don’t use it before the end of 2008.

In 2008 you can make gifts up to $12,000 per person to as many people as you want with no gift tax. A single person could make a $12,000 gift to as many individuals as he or she wants. A married couple together could give $24,000 to any one individual. So for example, a married couple could each give gifts of $12,000 to their 3 children ($72,000 in total) or to their 2 grandchildren ($48,000 total), etc. You can give cash, stocks, bonds, real property, partnership interests; just make sure the gift is of a “present interest”, i.e. one they can use now as opposed to sometime in the future.

In addition to the annual gift tax exclusion, you can make tax-free gifts by paying the tuition and medical expenses for relatives or even friends. Gifts such as these have no monetary limitation. Send the money for tuition directly to the school. Payments for books or room and board do not qualify nor does giving the money directly to the student to pass on to the school.

You can also pay unlimited medical bills if you make the payments directly to the health care provider and the medical expense is one that would qualify for an income tax deduction. You can also pay medical insurance premiums for another person.

Lastly, remember that gifts to charity are never subject to gift or estate tax. If you need help with any end of year gift strategies, contact us at Law Office of Scott C. Soady, A Professional Corporation for a free in-house consultation.

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