If you gave a large gift or received a large gift, you may be wondering about gift tax. Here’s the details on this rare tax:
- Gift tax is never paid by the recipient. If someone gifts you $30,000, you don’t have file a gift tax return or pay gift tax. The giver is responsible for that.
- You can give up to the exclusion amount each year before you have to file a gift tax return. In 2020, the exclusion amount is $15,000 per individual.
- The exclusion amount applies to each spouse, so if you are married you can potentially give up to $30,000 to an individual without having to file a gift tax return.
- If you gave over the exclusion amount to someone, you have to file a gift tax return by April 15th of the following year. Even if you have to file a return, most people don’t end up paying gift tax. You actually have to gift more than 11.5 million dollars in your lifetime before you pay any gift tax!
- Important note: All of this only applies to gifts from one individual to another individual. Gifts from a business or from a church or congregation are taxable and should be reported on your 1040 return. When in doubt as to whether a gift should be taxable income, discuss it with your tax preparer.
If you need a gift tax return prepared, or if you want to talk with a Clergy Financial Pro Advisor about gift and inheritance planning, visit our website at https://www.clergyfinancial.com/resources/proadvisor/ or call (763)-425-8778 today.
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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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