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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55276
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I understand about the 14K gift allowance, and I understand

Customer Question

I understand about the 14K gift allowance, and I understand about the 5 million exemption, so if gift taxes are not due until I give away over $5.25 million in my life time, why can't I give away as much as I want at any given time, and file a 709 @ tax time with the amount of overage I gave that year from the 14,000.00 per gift? thank you,[email protected]
Submitted: 4 years ago.
Category: Tax
Expert:  Richard replied 4 years ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. You can indeed give away any amounts at any time that you desire. During any calendar year, the first $14,000 for 2013 (or whatever the annual gift exclusion happens to be for any later applicable year) requires no reporting or tax because it is within the annual exclusion amount. Then, for any excess during a calendar year, you will need to file a Form 709 at the same time as filing your income tax for the prior year letting the IRS know how much was the excess that you gave during that calendar year so the IRS can keep track of how much of the lifetime exemption you've used.

I think that directly addresses your question, but if not, please let me know and I'll provide any supplemental information necessary. Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!
Customer: replied 4 years ago.
That was a simple answer to my question which I understood perfectly...thank you. But please answer this for me. As long as I do not go over the 5 million life time exemption then I do not have to pay any gift tax on the money I give away, but...if I do go over the 5 million, I pay gift tax on the amount that I am over? Am I correct here? And if this is true then why do people worry about having to pay gift tax on gifts if they know their lifetime exemption of 5 million $ could never be reduced to (0) because they don't have that kind of money to give away. I want to give away as much of my money to my children as possible while I am alive; I have already given both of them $30,000.00 each this my 5 million is going to be reduced by $32,000.00 this year at tax time, but I still don't pay gift tax because my exemption is still above the (0) line, correct?
Expert:  Richard replied 4 years ago.
You're's my pleasure! That is correct...until you've made cumulative gifts over the annual gift exclusion in excess of $5,250,000, you will owe nothing. The gift tax return is only a reporting mechanism; no tax will be due. And, yes, if you gave them each $30,000, the excess $16,000 each will use up $32,000 of your lifetime exemption, but no tax will result. Most people worry about gift tax because they don't understand how the law works. :)
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Expert:  Richard replied 4 years ago.
Thank you so much for the positive rating! I appreciate having had the opportunity to serve you! If I can be of assistance to you in the future, just look me up and I will be happy to help! For easy access, my bookmark is:

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