Celebrate the Annual Gift Tax Exclusion This Holiday Season
Gratitude has a lot more to do with how rich or how poor you feel than your bank account balance does. Almost everyone lives paycheck to paycheck these days, and some of them let the financial stress color their perspectives on everything, while others celebrate the non-financial things that are going on in their lives, even as they worry about where they will get the money to pay the next set of bills that will be coming due or how they will deal with the consequences if they cannot pay on time. People who have a surplus of money at the end of each pay period are similarly divided. Some of them feel compelled to hoard their money. Every time they hear bad news about the economy, they become convinced that financial uncertainty is coming for them next. They might even focus their worries on what will happen to their money after they die; those people have a reason to give cash gifts for the holidays. Then there are the folks who feel compelled to help others, no matter how much or how little money they themselves have. They were probably going to give away cash gifts for the holidays, but even so, it is financially advantageous for them to do so. To find out why, from a tax perspective, gifts are better than inheritance, contact a Bronx estate planning lawyer.
Even a Grinch Would Give Cash Gifts When Doing So Helps You Save Money on Taxes
The annual gift tax exclusion is enough to fill even the biggest Grinch with holiday spirit. It is a rule where you do not have to pay taxes on a monetary gift as long as the gift is below a certain value. The maximum amount per gift varies from one year to the next. In 2025, it is $19,000, as it will be in 2026. This means that you can give a family member a gift of up to $19,000 this year without paying gift taxes. You can do the same next year, since the exclusion resets every year. Furthermore, the limit is per recipient. If you have three children, you can give them each $19,000, meaning that you can give away $57,000 tax free. If you and your spouse each give a cash gift to the same recipient, this counts as two separate gifts. There is a lifetime limit, but it is millions more than you will ever have.
Estate planning lawyers sometimes counsel clients to spend down their assets, to make the probate of their estate less expensive. Giving cash gifts, pursuant to the annual gift tax exclusion, is a practical and legally uncomplicated way to do this. You can alleviate the financial stress of people you love, while saving money on taxes.
Schedule a Confidential Consultation With a Bronx Estate Planning Attorney
An estate planning lawyer can help you plan to give cash gifts strategically this year and in future years. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.
Source:
msn.com/en-us/money/realestate/estate-planning-mistakes-that-cost-families-millions/ss-AA1J4ZAj?ocid=msedgntp&pc=ACTS&cvid=69288d2edab44c64a7f3e90b04a69b27&ei=45#image=22