View
52
Download
0
Category
Preview:
Citation preview
WHAT IS THE ANNUAL GIFT TAX EXCLUSION
IN OKLAHOMA? “The annual gift tax exclusion allows you to give up to
$14,000 to any number of gift recipients within a calendar year free of the gift tax.”
Larry Parman OKLAHOMA ESTATE PLANNING & ELDER LAW ATTORNEY
What is the Annual Gift Tax Exclusionin Oklahoma? www.ParmanLaw.com 2
When you give someone a gift, you may not consider the tax implications. In
fact, gifts that you give in the United States are taxable. We have a federal gift tax
that carries a 40 percent maximum rate.
The reason why you do not receive a tax bill after you give people birthday gifts
is because there is an annual gift tax exclusion. At the present time, the amount
of this exclusion is $14,000 per year, per person.
This means that you can give as much as $14,000 to any number of gift
recipients within a calendar year free of the gift tax. To be clear, you can give any
amount tax-free, as long as you do not give more than $14,000 to any one
person within a calendar year.
It should be noted that this $14,000 figure is not permanently etched in stone.
There have been adjustments over the years to account for inflation, and the
What is the Annual Gift Tax Exclusionin Oklahoma? www.ParmanLaw.com 3
exact amount of the annual gift tax exclusion is always subject to change.
You do not have to use any of your $14,000 annual gift tax exclusion to give tax-
free gifts to your spouse. There is an unlimited marital deduction. This allows
you to give any amount of money to your spouse free of taxation.
ADDITIONAL GIFT TAX EXCLUSIONS
There are a couple of additional gift tax exclusions that we should highlight here.
One of them is the educational exclusion. You can pay tuition for students free of
the gift tax. There is no limit to the amount that you can pay, but it is a tuition-
What is the Annual Gift Tax Exclusionin Oklahoma? www.ParmanLaw.com 4
only exclusion. It does not include books, fees, living expenses, etc.
You could however choose to utilize your $14,000 per person annual gift tax
exclusion to provide extra resources for the student or students.
There is also amedical gift tax exclusion. You can pay medical bills for other
people without incurring any gift tax responsibility. It is also possible to use the
unlimited medical exclusion to pay for health care insurance that will benefit
others.
With both of these exclusions you must pay the bills directly. You cannot give the
money to the gift recipients tax-free under the assumption that they will use the
money to pay the bills.
LIFETIME UNIFIED GIFT AND ESTATE TAX EXCLUSION
In addition to these
gift tax exclusions,
there is also a unified
lifetime gift and estate
tax exclusion. We have
a federal estate tax
that is unified with the
gift tax.
There is a unified
lifetime exclusion that
stands at $5.34 million
for the rest of the 2014 calendar year. Each year there are adjustments to
account for inflation, so this figure may rise in 2015.
What is the Annual Gift Tax Exclusionin Oklahoma? www.ParmanLaw.com 5
Because of this unified lifetime exclusion, it is possible to give a tax-free gift to
someone within a calendar year that exceeds $14,000. If you do this, you would
be using a portion of your unified lifetime exclusion, so there would be less left
to apply to your estate after you pass away.
For example, let's say that you give $14,000 to your son on February 1st. You
could give this gift tax-free using your $14,000 per person annual gift tax
exclusion. At that point, all of your $5.34 million unified exclusion would be
available to you.
Later in the year, you decide to give your son an additional $1 million gift. To
give the gift tax-free, you would be using $1 million of your $5.34 million
lifetime exclusion. There would be $4.34 million remaining to apply to future
asset transfers.
CONCLUSION
The annual gift tax exclusion allows you to give up to $14,000 to any number of
gift recipients within a calendar year free of the gift tax. If you give more than
$14,000 to any one individual during a tax year, you would be using a portion of
your $5.34 million lifetime exclusion to give the gift tax-free.
If you are exposed to federal transfer taxes, you could use the $14,000 annual
gift tax exclusion to gain tax efficiency. This would enable you to transfer assets
tax-free without reducing your available lifetime exclusion.
If you want to obtain more in-depth information, schedule a consultation with a
licensed estate planning attorney.
What is the Annual Gift Tax Exclusionin Oklahoma? www.ParmanLaw.com 6
REFERENCES
IRS
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Gift-Tax
Forbes
http://www.forbes.com/sites/deborahljacobs/2013/11/01/the-2013-limits-on-
tax-free-gifts-what-you-need-to-know/
What is the Annual Gift Tax Exclusionin Oklahoma? www.ParmanLaw.com 7
About the Author Larry Parman
After helping his own family deal with a lengthy probate and a battle with the IRS following his father’s death in a farm accident, Larry made a decision to help families create effective estate plans designed to reduce taxes, and minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors. Following a dozen years in the investment banking and financial services business, in the mid-1980s Mr. Parman formed a law firm that gives families the peace of mind that comes from having created a premier estate and financial plan. After forming his law firm in 1984, he offered a series of public and private seminars to inform the public about using a Living Trust as the
foundation of a family’s estate plan. Today, Parman & Easterday is one of the leading business and estate planning law firms in the Midwest. The firm’s primary focus is on business and estate planning, elder law, asset protection, and providing effective estate planning solutions for clients. Today, the firm’s premier estate plan design is referred to as a Legacy Wealth Plan. Mr. Parman is a frequent guest on the radio and can be seen on television talk shows explaining the importance of proper estate planning. Prosperity Productions selected Mr. Parman as a featured speaker in a nationally-recognized educational video on Living Trusts. He is the author of numerous published articles on financial and estate planning matters and the co-author of two books, Estate Planning Basics: A Crash Course in Safeguarding Your Legacy and Guiding Those Left Behind in Oklahoma: Settling the Affairs of Your Loved Ones. Mr. Parman is a member and Fellow of the American Academy of Estate Planning Attorneys. He is also a member of the Oklahoma and Missouri Bar Associations, the American Bar Association, and the Oklahoma City Estate Planning Council.
www.ParmanLaw.com
OVERLAND PARK, KS 10740 Nall Avenue, Suite 160 Overland Park, KS 66211 Phone: (913) 385-9400 Fax: (913) 385-9422
OKLAHOMA CITY, OK 13913-B Quail Pointe Drive Oklahoma City, OK 73134 Phone: (405) 843-6100 Fax: (405) 917-7018
Recommended