How much money can I give away without being taxed?
The IRS allows you to give up to $17,000 per person per year without having to report it. That means, for example, that a married couple could give a married child up to $68,000 per year: Each parent spouse can give each child spouse up to $17,000. But note that even if you give more than $17,000 to one person in one year, it still is not likely to ever trigger a tax! You must report the amount that you give that’s greater than $17,000 to the IRS. You are not taxed until your total reportable gifts exceed your lifetime exemption, which currently is $12.92 million per person. And note that those lifetime gifts aren’t counted at all in calculation of Washington State estate taxes.
If I give money to someone, do they have to report it on their income tax return?
No. Gifts are not income, so they are not taxed to the recipient. If a gift actually is compensation in disguise, though, it will be taxed as income.
What is the Federal estate tax exemption?
It’s about $12.92 million and has an inflation escalator.
What is the Washington State estate tax exemption?
It’s about $2.2 million, and it also has an inflation escalator.
Are the exemptions for each heir, or for each estate?
For each estate.
How do estate taxes work for a married couple?
The tax is generally imposed only when the estate goes to the children. However, the couple can either have the benefit of one exemption or two, depending on the structure of their Wills or Living Trust.
How can I reduce my estate tax?
Generally, you can reduce estate taxes after your death with a smart program of lifetime gifts. You can also reduce estate taxes by making gifts to charity, either during your life, or at death, in your estate plan.