Gift Splitting
Candlefocus EditorFor the year 2022, the annual exclusion amount for gifts made by married couples is $32,000 and for 2023, it is up to $34,000. This basically allows you to give a single person up to $16,000 or $17,000 in one year without having to pay taxes on it. Any amount over the annual exclusion requires that a gift tax return be filed with the IRS. Also, certain gifts like those made to charities, political organizations, or to pay tuition and medical expenses on behalf of someone else, are generally not taxable.
Gift splitting can be a useful tool for couples who want to give more to a person or to charity. It can also help reduce gift tax liabilities, as the couple is only taxed on the amount that exceeds the annual exclusion. However, it’s important to note that couples who do this must file joint tax returns.
Gift splitting is a great way for married couples to maximize their giving. Couples can give more than an individual could give and help reduce their tax liabilities. It’s important to remember to file gift tax returns when the amount given exceeds the annual exclusion and to always consult with a tax or financial professional for advice about the best giving strategies for their particular situation.