GIVING MONEY OR PROPERTY AWAY?

How to Get Maximum Tax Deductions for Gifting

When it comes to the IRS and taxes, it’s hard to find good news. However, take a look at how you can gift money and pay either no taxes or deduct the amounts from your gross earnings.

Give to Your Loved Ones

• If you want to give money to your kids, friends, or relatives, you can give up to $13,000 per person to as many people as you like without paying any gift taxes.

• This means you won’t even have to report these gifts of money on your income tax return.

Reduce Your Assets to Reduce Taxes

• With giving, you reduce your assets and thus the taxes you would be paying on those assets.

• As you age, reducing your assets could become more important, particularly to your heirs who might have to pay estate taxes.

Beef up a 529 College Savings Plan

• You can gift up to $65,000 to someone’s 529 College Savings Plan without paying any taxes on it. However, you must distribute the sum over 5 years.

• Plus, you must decline to give that same child any more money over those same 5 years, or else you would have to report those additional gifts to the IRS and pay taxes on them.

Make Charity Donations

• If you don't itemize, you just get your standard deduction.

• However, if you do itemize and give, you can deduct up to 50% of your gross adjusted income for that year. Double-check with your tax professional regarding the particulars of such generous giving.