Don’t Run Afoul of the Gift Tax. –

Current law allows a person to give someone up to $13,000 per year without having to file a Gift Tax return, Form 709.  There is usually no tax due, the giver pays any tax, at the time but the form allows the IRS to keep track of gifts made in a person’s lifetime. Upon a persons death all reportable gifts will be used in the calculation of the Estate Tax, Form 706. Under current Federal law a person is allowed a $5,000,000 estate, tax free and the gifts reported on Form 709 will count towards that amount. Form 709 is due by April 15 of the year following the year when the gift is given.

The IRS is going after persons who do not file a gift tax return by checking public records of any large transactions showing little or no payment; such as a house. There are exceptions to the above but if you contemplate making any gifts in excess of the $13,000 you should see a tax professional in order to comply with all laws.

A note for New York residents, the NY Estate Tax free amount is $1,000,000 so you can owe nothing top Uncle Sam but have to pay New York