Denver Federal Gift Tax Attorney
The purpose of the federal gift tax is to ensure that people do not give away their assets during their lives in order to avoid paying federal taxes at the time of their death. These tax laws change from year to year and can make giving large gifts tricky due to the tax consequences. If you are considering giving a large financial gift, Colorado Estate Planning Law Center can help.
Our Denver federal gift tax attorneys can recommend options to help you minimize taxes now and in the future. For more than 21 years, our firm has been serving clients in the Greater Denver, Jeff Co, and Front Range areas. We are committed to getting to know our clients, understanding their goals and needs, and recommending solutions tailored to each person’s unique situation. Call our office at (303) 420-2863 or contact us online for a free initial interview.
Why You Need a Denver Federal Gift Tax Attorney?
Generally speaking, anytime you give a gift to someone, it is taxable – but not always. If that sounds confusing, it’s because it is. But we can help. The federal tax laws allow you to give a certain amount in gifts in your lifetime before you must pay taxes. That being said, there are exceptions to every rule. When you hire an experienced federal gift tax attorney, they can ensure that you’re not paying taxes unnecessarily. If you just assume that you always have to pay taxes on gifts, you could end up missing out on a lot of savings.
What Does the IRS Consider a Gift?
A gift is anything that you are not expecting to receive payment for. This could be money, properties, investments, or any other type of tangible or intangible asset.
Gift Taxes and Estate Planning – the Basics
Federal gift taxes generally are paid by the gift giver, not the recipient. In some situations, the gift recipient may agree to pay the tax instead. In 2020, a person was permitted to give up to $11.58 million in gifts before the gift tax would kick in. In 2021, that was raised to $11.7 million for a single person. For a married couple, the threshold is $23.4 million. This is a lifetime amount. If you get to the point where you’ve given more than $11.7 million in gifts as a single person, you will have to pay taxes for gifts going forward.
Additionally, this means that if you leave less than $11.7 million dollars to your heirs (if you’re single) or less than $23.4 million to heirs if you’re married, no federal gift tax will be applied.
Keep in mind that there’s also an annual limit. If you give anyone person more than $15,000 in gifts in one year, you’ll likely have to inform the IRS. However, you can give $15,000 to as many people as you wish without having to pay the gift tax, as long as you’re below your lifetime limit. When you gift more than $15,000 to one person in a year, it goes toward your annual lifetime gift amount of $11.7 million. You could gift $15,000 to 100 people in one year and it still wouldn’t trigger the gift tax. Even if you gift one person more than $15,000, you don’t necessarily have to pay a gift tax.
For example, if you give someone $50,000 one year, you paid $35,000 more than the annual exclusion. Your lifetime gift tax exclusion will be reduced by $35,000.
You May Have to File a Gift Tax Return
If you gift someone more than the $15,000 annual limit, you likely need to file a gift tax return. Interestingly, this doesn’t necessarily mean that you have to pay taxes on it. You’re simply required to file the tax return. The gift tax limits and exclusions can be a bit confusing, so it’s always in your best interest to contact an experienced federal gift tax attorney to ensure you aren’t paying unnecessary taxes.
What Gifts Are Not Taxable?
There are some exceptions to the gift tax. Some of the most common types of gifts that are not taxed include the following:
- Gifts that do not exceed the annual exclusion for the year
- Tuition you pay for someone (educational exclusion)
- Medical expenses you pay for someone (medical exclusion)
- Gifts to your spouse
- Gifts to a political organization
Contact Our Denver Federal Gift Tax AttorneyAll of Your Gift Tax Concerns
It pays to review your options with an experienced Denver federal gift tax lawyer before making a large financial gift. We will evaluate your financial situation and explain options that can help you minimize or completely eliminate gift taxes. Additionally, through proper gift planning and estate planning, we can help you remove a large portion of your estate through gifts, allowing your heirs to save a significant amount in estate taxes upon your death.
For the latest information on gift tax and estate tax laws, call our Colorado attorney at (303) 420-2863. You may also contact us online.