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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12023
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am told that gift taxes are offset by the lifetime limit

Customer Question

i am told that gift taxes are offset by the lifetime limit of $5 million, but I don't see any
room on form 709 that takes care of this. So if I give a gift of $50,000 to my son, is really no gift tax is due?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.
That's right... The form 709 doesn't deal with the fact that there's a lifetime gift exclusion (which now grows permanently with inflation every year - $5,450,000 this year, up 90,000 from 2014 ... didn't go up for 2016 for the same reason Social Security didn't go up - no real inflation)...But yes, the real world purpose that form 709 serves, is to track AGAINST that lifetime exemption....Every time you give more than 14,000 to any one person in the year and file the form 709, you are "eating away at" your lifetime exemption....I hope this has helped....Please let me know if you have any questions at all....If this HAS helped, and you DON’T have otherquestions … I'd appreciate a positive rating (using the faces or stars on your screen, andthen clicking “submit I know it takes an extra step, but JustAnswerwon’t credit us for the work until you rate....Thank you!Lane……I hold a law degree (JD, Juris Doctorate),with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance &tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, since 1986.
Customer: replied 1 year ago.
The form 709 asks to calculate the tax and pay, so how do you take care of this if you don't have to pay?
Expert:  Lane replied 1 year ago.
You'll see, as you complete the form that no tax is owed. Look at line 7 on part 2 of the form....Once you enter the $5,450,000 that goes there you'll see that the computation comes down to your owing nothing.