Welcome. THANK YOU for choosing Just Answer. My name is XXXXX XXXXX my goal is to help make YOUR life, a little...LESS taxing.
Q: How is this possible without paying tax?
A: This is possible due to the Unified Gift Tax
Credit. Currently U.S. citizens are allowed to gift as follows;
- The annual exclusion for gifts is $11,000 (2004-2005), $12,000 (2006-2008), $13,000 ( 2009-2012) and $14,000 (2013).
- The applicable exclusion amount is increased to $5,000,000 for estates of decedents dying on or after December 31, 2009.
- The applicable exclusion amount for gifts is $1,000,000 (2010), $5,000,000 (2011), $5,120,000 (2012) and $5,250,000 (2013).
As you can see these amounts have changed over the years.
Ok, what does the above reference mean? What is means that currently, U.S. citizens are allowed to gift up to $14,000 annually to any one individual without creating a taxable event (without any forms having to submitted to the IRS). Gift amounts that exceed the $14,000 will require the donor to complete a Form 709,which is a gift tax return (informational purposes only--no tax due by the donor). Currently there is a lifetime gift exclusion of $5,250,000 for U.S. persons, which means that they can gift away this amount in their lifetime and not have to pay tax on it. For more detailed information, you can refer to the IRS Pub 950, which should shed a bit more light on this matter for you.
Link to Pub 950:
Please let me know if I can be of further assistance to you regarding this matter.
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