How much can I give for a wedding?

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Q. How much money I can spend/give my daughter and her soon-to-be spouse to pay for their wedding and what are the tax ramifications? I’m 66 and retired, and I receive two pensions and Social Security and I have a 401(k). I’ve set aside $50,000 for this. I would like to pay for her entire wedding as her dad. She is my one and only!
— Dear old dad

A. Congratulations to you and your daughter for reaching this milestone.

It’s great that you’ve set funds aside with the idea of giving such a generous gift for their wedding.

But on your question about how much you can give, the short answer is that you can give any amount that you wish, said Charles Pawlik, a certified financial planner and chartered financial analyst with Beacon Trust in Morristown.

He said there no overall cap to what you can gift a child each year, but there are limits to gifts that can be given without creating a taxable event.

Individuals can gift up to $14,000 per recipient in 2017 without triggering a taxable gift, Pawlik said.

“This is what is referred to as the annual gift tax exclusion, and is the amount that can be gifted to an individual each year without triggering a taxable gift or affecting your lifetime gift tax exemption,” he said.

Married couples are able to gift up to $28,000 a year per recipient without triggering a taxable gift by way of the gift-splitting rule, which allows a married couple to split a gift’s total value as though each contributed half of the amount, he said. This would allow you and your wife to gift a total of $56,000 to your daughter and her fiance in 2017.

Pawlik said the annual gift tax exclusion is separate and distinct from the lifetime gift tax exemption, which allows for up to $5.49 million in tax-free transfers for 2017.

“If amounts in excess of the allowable annual gift tax exclusion are given, a portion of the $5.49 million lifetime gift tax exemption would need to be utilized — with the exception of certain gifts that are not taxable gifts such as tuition or medical expenses you directly pay for someone,” Pawlik said. “The gift tax only kicks in after lifetime gifts exceed the $5.49 million lifetime gift tax exemption.”

If you opt to gift-split with a spouse or make a gift that exceeds the allowable annual exclusion amount, Form 709 (United States Gift Tax Return) would need to be filed, he said.

One essential side note: It’s important to ensure that you are taking your overall financial picture and your needs in retirement into account before making substantial gifts to family members, Pawlik said.

“It is also important to understand any tax ramifications that may be involved,” he said. “A certified financial planner professional can help to ensure that you are considering all of your objectives in the context of making gifts, and that you have a good understanding around any potential tax ramifications.”

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NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.