Gift Tax Basics
By Shanna N. Fink
November 17, 2021
As the holiday season approaches, Attorney Shanna Yonke shares insight regarding a topic at the top of client’s mind – what amount can be gifted without tax consequences?
Video Transcript:
My name is Shanna Yonke, and I’m an attorney on Ruder Ware’s Estate Planning Team. As the holiday season approaches, I will share basic information regarding the gift tax – a common topic of conversation with our clients this time of year.
Wisconsin does not impose a gift tax, but the federal government does impose a gift tax. Here’s how it works.
Each year, you can make gifts of $15,000 per person to as many different people as you want. These are called “annual exclusion gifts.” They are not subject to gift tax.
If you make gifts in excess of $15,000 per person in a year, it’s possible that you still may not be subject to gift tax. Over the course of your lifetime, you can gift a certain amount of assets without paying any gift tax. This amount is called the “gift tax exemption.” In 2021, the gift tax exemption amount is $11,700,000.
The annual exclusion gift amount and the gift tax exemption amount are adjusted for inflation, so those amounts may change from year to year.
If your gifts exceed the annual exclusion gift amount and you have depleted your lifetime gift tax exemption amount, you will owe a 40% gift tax on every dollar over those amounts.
This explanation of the federal gift tax is very simplified. If you have questions regarding the gift tax, please feel free to contact any attorney on Ruder Ware’s Estate Planning Team.
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