It is common to see people getting monetary gifts from their family or friends. There could be many reasons behind. It might be to transfer income–making assets to a beneficiary or to decrease their taxable estate. Or one might simply want to gift the money and enjoy it. In US, one is allowed to give gifts up to $13,000 every year and to as many individuals as they like and without having to pay any gift tax. One is also allowed to give an unrestricted amount to a medical provider or a school in addition to the $13,000. At present, there is gift exclusion of $1 million from federal lifetime. Any gift made between married persons who are US citizens is not subject to gift tax.
The $13,000 per recipient every year limit comprises of different gifts. Married couples are allowed to split the gift, and can give up to $26,000 per recipient. This suits those couples who carry more liquid assets that are accessible to give. For students, most colleges saving programs allow funds up to $13,000 for the first five years. Thus, one can deposit $65,000 per beneficiary in one year.
It is a good idea to utilize lifetime gift exclusion of $1 million to minimize your gross taxable estate and reduce that tax burden, especially when one has to deal with a family-owned business. A good strategy to follow when gifting is to gift a -basis stock to a child, an elderly parent or a young adult. The gift of this kind carries over the giver’s basis to the beneficiary. This tactic is often recommended when the beneficiary to be in a lower tax range and would have to pay lesser capital gain’s tax as compared to the donor. However, it is essential to consider some aspects before making use of this strategy, such as if the gift can impact the child’s financial aid or financial aid negatively or impact the Social Security taxation of the elderly person in any way
Friends and family members are often more willing to help one out with your financial crunches. However, here both the lender and the borrower should make sure that money is being borrowed or lent responsibly. If the money is like a permanent gift and need not be returned, then there are lesser issues. However, things are different if the money is being taken on loan from a friend or a family member. The borrower needs to be very careful here as money can sour even the best of relationships. And relationships should be kept at top priority here. You friends and family will not charge any interest from you or ask you to fill out any complex documents when giving out the money as loan. Therefore, as a borrower, you need to preserve that trust and return the money on time and in good faith. Today, it is common to see people borrowing and lending money in the family. Visit http://www.stitchwith.me/ for more like this article.