Tax Considerations for Gifting PC1411-Digital

TAX MANAGEMENT

TAX CONSIDERATIONS

federal tax returns, simplifying your tax reporting, and deposits up to $14,000 per beneficiary per year will qualify for the annual gift tax exclusion. Account owners can even combine five years worth of Annual Exclusion Gifts and could thus contribute $70,000 per donor (in 2018) for any beneficiary in year one, effectively removing those assets from the donor’s estate for estate tax purposes. 3. TUITION AND MEDICAL EXCLUSION GIFTS This type of gift is most relevant when the donor is not a parent of the beneficiary because generally the parents’ payment of these expenses is considered support of the child and not a gift. These gifts are made directly to an educational institution for tuition amounts or to a provider of medical care (including payments for medical insurance, but not for expenses that are reimbursed by insurance).

GIFT

NO GIFT $35,000

Initial Amount for Tuition

$35,000

+  Initial Amount for Insurance

$1,500

$1,500

=  Total

$36,500

$36,500

-   Estate Tax

$0

$14,600 (at 40%)

Beneficiary Amount

$36,500

$21,900

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