Will you owe gift tax if you make gifts exceeding $13,000 per year? For 99% of the population, the answer is never.

Federal gift taxes are computed and reported on Form 709. Under present federal tax laws, gift taxes are payable only if the cumulative amount of your lifetime gifts (excluding those not exceeding $13,000 per year) exceeds $5 million. Gifts not exceeding $13,000 per year per person don’t count in determining if you have used up your $5 million exemption. For example, you would have to give an individual an annual gift of $113,000 per year for 50 years to use up your $5 million exemption. Further, you could give $13,000 per year to 1,000 people, and you would not use up any of your $5 million exemption

It is true you are required to file Form 709 with the IRS for each year during which you make one or more gifts in excess of $13,000 per person. This is an informational return (that allows the IRS to keep track of your gifts over $13,000); no tax is due unless you have used up your $5 million exemption.

Neither Oregon nor Washington has a gift tax, or any equivalent to federal Form 709. Thus, you can make unlimited gifts during life without state gift tax exposure.

Before you work yourself into a frazzle about having to pay gift tax, you should visit an experienced estate planning attorney with a working knowledge of the gift tax and estate tax laws.

Leave a Reply

Your email address will not be published. Required fields are marked *