Are you thinking of giving a monetary gift this holiday season? You may or may not owe a federal tax. Most gifts, such as giving to a spouse or charitable cause, are not subject to tax. But, there are exceptions.
So what is a gift? A gift is money, property, and even the use of a property. Gifts are given without the expectation to receive something of equal value in return. This also includes selling an item for less than it is worth or giving an interest-free or low-interest loan.
The gift tax does not apply to gifts given to someone (other than a spouse) until the amount exceed the annual exclusion of $15,000. At this point, you need to report the total amount of gifts to the IRS and you may be subjected to a tax.
The person who receives your gift doesn’t have to report it to the IRS or pay gift or income tax on its value.
Gifts that are not to be included in the annual amount are these types of gifts:
- Tuition or medical expenses you pay directly to an educational or medical institution for another’s benefit
- Gifts to your spouse
- Gifts to any political organization
- Charitable donations
If you and your spouse donate together, the amount can total $30,000 before it becomes a taxable gift. The gift can be considered as made one-half by you and one-half by your spouse. If you split a gift you made, you must file a gift tax return to show that you and your spouse agree to use gift splitting. You must file a Form 709, United States Gift Tax Return, even if half of the split gift is less than the annual exclusion.
If you seek help or have questions about your 2018 gift taxes, contact a certified public accountant in Missouri. Hiring CPA accounting in Missouri may help you get a better handle on your taxes and ease the process. Call Schultz, Wood, and Rapp P.C. for the advice and counsel you need.
