Planning Ahead

year whether in cash or other property of value, then you definitely are not required to file a federal tax form known as a Form 709. More than that amount, you are expected technically to file a federal Form 709. Gifting does not have to be in cash. The taxpayer, by the way, for gift tax purposes is the person who gave the gift not the person receiving it. If you give more than $15,000 this does not mean necessarily that you are subject to Federal gift tax. In fact it is extremely unlikely that you are subject to gift tax even if you should file a gift tax return for reasons that are discussed here.

Additionally, it is extremely easy to give away more than the annual exclusionary gift without even technically being required to file a Form 709. Here is how.

You can give an unlimited amount to your spouse provided that your spouse is an American citizen. (There are different rules for non-citizens.)

Next, if you are married and want to benefit your son, for example, who is also married and has children, you and your spouse can give $15,000 each to your son (total $30,000) and also to your son’s spouse (another $30,000) and to each of your son’s children. If you want to compound the gifting you can simply repeat the gift for the following calendar year or years. Note, however, that this is just a description regarding gift tax. There can be reasons other than gift tax reasons to delay in gifting.

Before gifting, consider whether you will need the funds in the future.

With people living longer and the high cost of care in assisted living, senior communities or nursing home care, you need to know you will have enough. Also, for capital gains tax purposes it is usually better for children and others to inherit highly appreciated assets which receive a step up in basis than to receive them directly.

After hearing all of these exclusions you might wonder if there are reasons to file a gift tax return at all. One reason might be to keep track of the value of the gift at the time it is given away. If the asset has increased in value since purchase both you and the party receiving it may need to keep track of its value as of the date of the gift — a concept known as basis. On resale this may be important to determine federal taxes regarding profit or loss.

For this as well as many matters, especially involving estates and taxes, be sure to check with a knowledgeable professional since every case is unique to its facts.

Janet Colliton, Esq. is a Certified Elder Law Attorney and limits her practice to elder law, retirement and estate planning, Medicaid, Medicare, life care and special needs at 790 East Market St., Suite 250, West Chester, Pa., 19382, 610-436-6674Call via Mitel , colliton@ collitonlaw.com. She is a member of the National Academy of Elder Law Attorneys and, with Jeffrey Jones, CSA, cofounder of Life Transition Services LLC, a service for families with long term care needs. Tune in on Wednesdays at 4 p.m. to radio WCHE 1520, “50+ Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care.

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