Time is running out for making 2014
tax-free gifts. You have only a few more months to use your annual gift tax
exclusion for this year, or it's gone forever.
Each year you can make gifts up to a
certain dollar limit to an unlimited number of people, free of any gift tax.
For 2014, the dollar limit per recipient is $14,000. These gifts do not reduce
your lifetime exemption from gift and estate taxes.
Why would you want to make annual tax-free
gifts? There are a number of possible reasons. Tax-free gifts are often used in
estate planning as a way of steadily reducing the value of a taxable estate
during the owner's lifetime. Another strategy is to transfer income-producing
assets to children or other family members who are in a lower tax bracket. If
done carefully to avoid the "kiddie tax," the result can be a lower
overall tax bill for the family unit.
If you fail to use this year's exclusion,
it is not carried over to future years. To qualify as a 2014 gift, the
transaction must be completed by December 31, 2014. If you are writing a check
as a 2014 gift, do so in time for the recipient to deposit it before year-end.
Check with us if you would like more information
about making tax-free gifts in your situation.
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