Can I Give Tax-Free Gifts to My Children?

The concept of tax-free gifts can sound counterintuitive.  Of course you have to pay sales tax when you buy a gift, and you paid taxes on the income that you used to purchase the gift, but beyond that, why would there be a tax? This is a good question, but there is in fact a gift tax in the United States. This tax is in place to stop people from giving gifts in an effort to avoid the federal estate tax. These two taxes are unified, and they both carry a 40 percent top rate at the present time. The existence of the gift tax is the bad news, but there is also some good news. It is possible to give tax-free gifts to your children by using the exclusions that are available to you. Annual Gift Tax Exclusion There is an annual per person gift tax exclusion. Each taxpayer can give as much as $14,000 to individual gift recipients within a calendar year without facing any gift tax exposure. To be clear, you can give any total amount of money gift tax-free, but to use this exclusion, you canno


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