Episode 56: Understanding The Gift Tax

Today’s Prep:

Whether you are nearing retirement or already in it, you may be ready to gift some of your money to future heirs even before you die. What kind of taxable event does giving a financial gift cause?

(Click the featured times below to jump forward in the episode)

Equipping Points:

Do you have big heart and want to generously share your wealth? With large sums of money, you may be wondering just what kind of taxes a financial gift may ultimately cost. How does a financial gift get taxed and how does that play into your overall estate?

In this episode of the Cover Your Assets KC podcast, David talks through some of the specifics as well as some of the myths when it comes to the gift tax as well as the estate tax. When it comes to an estate tax, most people don’t have $22 million for their heirs to inherit, which means that most people don’t have an estate tax problem. More often, people are worried about the gift tax and what that entails.

You can give $15,000 away each year to any individual (or even $15,000 to multiple individuals) that you don’t need to report to the government. This is called the annual gift tax. If you give higher than $15,000 to an individual, you have to file form 709 with the IRS, but you don’t owe any taxes on that gift. That means, when you die, the amount extra that you gave away will then be included in the estate tax.

Outside of the gift tax or estate tax, things like tuition or medical bills can be paid for directly and not taxed. For example, Ken Langone, one of the founders of Home Depot, paid the tuition for the medical school students of NYU. It’s a way to make a significant impact and also lessen the estate and estate tax later on. There is no annual limit on how much you contribute to tuition or medical bills.

Giving money away might be easier than you thought, allowing you to give generously now instead of waiting until after you pass away.

Listen to the full episode or click the timestamps below to hear more about a specific segment.

[1:31] – Debunking the estate tax problem.

[4:35] – What gift amount creates a taxable amount?

[7:26] – How does a gift now impact your estate tax later?

[9:13] – Does anything with the gift tax change when contributing to a 529, say for grandkids?

[11:39] – Two gifts that avoid the gift tax and do some good.


Today’s Takeaway:


Additional Resources:

PODCAST: 3 Things To Know About Inherited IRAs

PODCAST: I’ve Got A Will, Isn’t That Enough?



More From David:

The host: David Dickens

Sign up for our weekly email newsletter:

We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives.

Investment advisory services are offered through Brookstone Capital Management LLC, an SEC Registered Investment Advisor. Kansas City Financial Advisors and Brookstone Capital Management LLC are separate companies.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product.

Any references to protection benefits or steady and reliable income streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by insurance company. Annuities are not FDIC insured.

The information and opinions contained in any of the material requested from this website are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. They are given for informational purposes only and are not a solicitation to buy or sell any of the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

Privacy Policy | Terms of Use

Call Now Button