Gift Taxes Attorney in Cary, North Carolina
What Are Gift Taxes?
Gift Taxes is a tax on a gift a living person gives to another. Many people worry about this, especially in estate planning and end-of-life scenarios. Some people want to give their beneficiaries part of their inheritance while they are alive and can see the beneficiary receive and enjoy the gift. This can be a wonderful thing that strengthens relationships. However, do without knowing the consequence could cause a big tax bill down the line.
The IRS allows you to give up to $15,000 to one person in a calendar year and not report it. Therefore, no taxes would be due in this situation. You can double the gift amount to $30,000 in a calendar if you are married and both spouses are giving the gift.
However, if you give $15,001 or more to a person in a calendar year (or $30,001 as a married couple), the IRS requires you to report the gift on your tax filing documents. No taxes are due on the gift at that time. In North Carolina, you don't have to pay a gift tax. However, the IRS is keeping track of these reported gifts and the IRS is going to add the total amount of all those gifts to your estate value upon your death. This amount will determine your estate value and whether or not you are exempt from estate taxes. If those gifts plus your estate value at your death exceed approximately $11,500,000 then the IRS will charge a hefty tax on the amount that exceeds the exempted amount. Therefore, make your gifts strategically!
How to Avoid Gift Taxes?
The best way to avoid gift taxes in North Carolina is to give amounts under the reportable amounts. As an individual, do not give more than $15,000 to a person in a calendar year. If you are married, do not give more than $30,000 to a person in a calendar year. If you do this then you do not have to report it.
Another way to avoid Gift Taxes in North Carolina is to spend your assets so that your estate value is under approximately $11,500,000 (for a single person) or $23,000,000 (for a married couple who made the proper election for a spouse's unused exclusion amount).
Lastly, if your estate value is approaching, over, or projected to be more than the current exempted amount of approximately $11,500,000 you need to seek legal advice on additional strategies to reduce your estate's tax liabilities.