Yes, you’re correct Lois. It can be a good estate planning move to transfer money to others if the estate is above the amount excluded for estate taxes. Also it’s a way to transfer income producing property to others in lower tax brackets. You can gift up to 12K (24K for joint gifts) to as many persons as you want with no gift tax consequences.
If the parents’ income it too high to enable their child to qualify for college financial aid, gifting the money is probably a good idea, but if their income is not so high as to disqualify their child from receiving financial aid, then it maybe isn’t such a good idea. There’s also the possibility that the parents could establish a Sec 529 plan to start a college fund.
John Stevens, EA
Stevens Tax & Accounting, Inc., dba Equi-Tax
651-773-5000
FAX 651-457-4529
equitax@unique-
www.equitax.
From:
Sent: 10/13/2008 2:09 PM
To:
Subject: [taxchat] gift tax question
I want to verify my reply to a client, though my research indicates I
have given her the correct answer. If a married couple each transfers
$12,000 in a year to their infant child's account, no gift tax return
needs to be filed, but if it exceeds $24,000 total, then a gift tax
return must be filed. Is this correct? Thanks in advance for your
replies.
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