Do You Need to File a 2016 Gift Tax Return by April 18?

Do You Need to File a 2016 Gift Tax Return by April 18?

Last year you may have made significant gifts to your children, grandchildren or other heirs as part of your estate planning strategy. Or perhaps you just wanted to provide loved ones with some helpful financial support. Regardless of the reason for making a gift, it’s important to know under what circumstances you’re required to file a gift tax return. Some transfers require a return even if you don’t owe tax. And sometimes it’s desirable to file a return even if it isn’t required. When filing is required Generally, you’ll need to file a gift tax return for 2016 if, during the tax year, you made gifts: • That exceeded the $14,000-per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse), • That exceeded the $148,000 annual exclusion for gifts to a non-citizen spouse, • That you wish to split with your spouse to take advantage of your combined $28,000 annual exclusions, • To a Section 529 college savings plan for your child, grandchild or other loved one and wish to accelerate up to five years’ worth of annual exclusions ($70,000) into 2016, • Of future interests — such as remainder interests in a trust — regardless of the amount, or • Of jointly held or community property. When filing isn’t required No return is required if your gifts for the year consist solely of annual exclusion gifts, present interest gifts to a U.S. citizen spouse, qualifying educational or medical expenses paid directly to a school or health care provider, and political or charitable contributions. If you transferred hard-to-value property, such as artwork or interests in a family-owned...
Don’t miss your opportunity  to make 2015 annual exclusion gifts

Don’t miss your opportunity to make 2015 annual exclusion gifts

Recently, the IRS released the 2016 annually adjusted amount for the unified gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption: $5.45 million (up from $5.43 million in 2015). But even with the rising exemptions, annual exclusion gifts offer a valuable tax-saving opportunity. The 2015 gift tax annual exclusion allows you to give up to $14,000 per recipient tax-free — without using up any of your gift and estate or GST tax exemption. (The exclusion remains the same for 2016.) The gifted assets are removed from your taxable estate, which can be especially advantageous if you expect them to appreciate. That’s because the future appreciation can avoid gift and estate taxes. But you need to use your 2015 exclusion by December 31. The exclusion doesn’t carry over from year to year. For example, if you and your spouse don’t make annual exclusion gifts to your grandson this year, you can’t add $28,000 to your 2016 exclusions to make a $56,000 tax-free gift to him next year. Questions about making annual exclusion gifts or other ways to transfer assets to the next generation while saving taxes? Contact us! ©...