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How Much Can I Gift in 2019?

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By Matt Forrey, RBC Wealth Management, Resident since 2009 and James Carbonell, RBC Wealth Management, Resident since 2004

As the end of the year approaches, many families start to consider making non-charitable gifts to family members or other individuals important to them. In 2018, the IRS raised the annual gift exclusion amount from $14,000 to $15,000, where it remains today.

That means for this tax year, individuals may give any number of people up to $15,000 each in cash or assets ($30,000 if your spouse joins in making the gift) without triggering gift, estate or generation skipping taxes. This annual gift tax exclusion applies only to “present interest” gifts; the recipient must have an unrestricted right to the immediate use and enjoyment of the gift. On the other hand, “future interest” gifts are generally taxable, regardless of their amount.

It is important to remember that gifts exceeding the annual gift tax exclusion are subject to a gift tax. The lifetime gift tax exemption offsets any such gift tax. This credit is applied to cumulative lifetime gifts to determine any gift tax liability. The lifetime gift tax exemption equivalent amount is $11.40 million (for 2019).

Exclusions for medical and tuition payments

Not all payments are subject to the annual gifting limit. Current law allows an unlimited exclusion for certain tuition and medical payments made on behalf of others. To qualify for this exclusion, you must make the payments directly to the educational institution or medical facility. Payments for medical insurance also qualify for the medical exclusion. Unfortunately though, payments for dormitory fees, books, supplies and similar school expenses do not qualify for the tuition exclusion.

Feel free to contact our office if you have questions about gifting or other strategies. carbonellforreywmg@rbc.com 925-279-1701

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