26 Jul How much can I gift each year without owing taxes?
Q. How much can a parent give to a son/daughter each year without incurring taxes in New Jersey?
A. Unless you’re talking about big money, taxes may not be an issue.
The good news? New Jersey does not have a gift tax. We’re guessing you’re asking about the federal gift tax, which you could owe if your gift to each child exceeds the federal gift tax exclusion of $15,000 a year.
Following the passing of the Tax Cuts and Jobs Act,you can gift up to $15,000 in 2019 to any individual without incurring any gift tax, said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield.
This is called the annual exclusion.
“If you give more than the annual exclusion to any one person within the calendar year, you are required to report the gift on IRS Form 709,” Gobo said. “But keep in mind, just because you are required to report the gift on Form 709 doesn’t necessarily mean you will pay any out-of-pocket tax.”
That’s because the tax bill also raised the lifetime gift and estate Tax to $11.4 million in 2019, or $22.8 million for married couples.
So if you give away less, no federal gift tax is owed, he said.
Gobo said if you happen to be in the position to give away more, anything over excluded amounts could be taxed as much as 40 percent.
If that’s the case, make sure you work with a financial advisor who can guide you before you make a move.
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This story was originally published on July 26, 2019.
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