Any time you give someone a gift, you are engaging in a taxable act. This is something that will go over the heads of most people because there is a $13,000 per year annual gift tax exemption. You can give gifts totaling this amount to any number of recipients each year without exposing yourself to the gift tax and its current 35% rate.
Most people don’t give gifts exceeding this amount to any one individual during a given year so it is usually not a factor. However, sometimes there are occasions when people may in fact want to transfer a large sum of money to a loved one.
This can sometimes happen during a medical crisis. If you knew someone who needed money to pay for a medical procedure, could you give this individual the money as a gift free of taxation?
The answer is yes and no. You may not give the individual the money, but you can pay the medical bills directly to the health care providers.
This exemption extends to health care insurance. If you wanted to provide someone with medical insurance as a gift, you could do this without incurring any gift tax responsibility.
It is important to understand the ramifications of significant acts of giving with regard to taxation. The best way to proceed is with the guidance of a seasoned and savvy Campbell CA estate planning lawyer who has a thorough understanding of current tax laws and proven tax efficiency strategies.
- Act in Advance to Prevent a Conservatorship - April 27, 2021
- Beneficiary Designations and the SECURE Act: Prior Designations - April 20, 2021
- Beneficiary Designations and the SECURE Act: Eligible Designated Beneficiaries - April 16, 2021