‘Tis the Season for Gifts!

The halls are decked, cookies are out for Santa, presents are under the tree, and we are all in the giving spirit this time of year. If you are fortunate enough to be able to give large gifts, remember you have until December 31 to do so for 2021 and the maximum untaxable amount is $15,000 per person ($30,000 in the case of married couples).

Paying for someone’s tuition or medical expenses are not considered taxable gifts as long as you pay the education and medical providers directly. In addition, gifts between spouses are not considered taxable gifts, nor are gifts to certain charitable and political organizations.

If you decide to gift a security, like stock, the gift value is the fair market value of the security at the date you transfer the security. The new owner assumes your cost basis (purchase price) along with the holding period (long or short term). The same principle applies to cryptocurrency.

If the goal of your gift is education funding, you can “superfund” a 529 plan. Currently, you can place 5 years worth of gifts at one time into a 529 account without it being a taxable gift. A 529 plan isn’t just for college these days, but up to $10,000 a year can be withdrawn for tuition for grades K-12.

If you do decide to gift over $15,000 per person, you will need to report the gift and recipient on Form 709. Each person currently has up to $11.7 million that they can gift or leave in their estate without tax consequence. This lifetime exclusion is subject to change based on inflation or legislative changes.

The rules and strategies on gifting can be complicated. Should you have questions or concerns regarding gifting, please do not hesitate to contact one of our qualified advisors.