Gift-splitting occurs when a married couple combines their gift tax exclusions to jointly make a gift to a third person. This allows both spouses to treat the gift as if they each gave half of it, effectively reducing the amount of gift tax owed on a large gift. For instance, if they give a gift of $20,000, each spouse can utilise their annual exclusion of $10,000.
Gift-splitting is a tax strategy that enables a married couple to pool their annual gift-tax exclusions and present a larger gift to a third party without incurring gift tax. For instance, John and Jane, a married couple, intend to give their son a $30,000 gift. Rather than each giving $15,000 and paying gift tax on the excess, they opt for gift-splitting. They combine their annual exclusions of $15,000 each, resulting in a total of $30,000, which they present to their son without incurring gift tax. This example demonstrates how gift-splitting enables a married couple to present a larger gift without incurring gift tax. By pooling their annual exclusions, they can present up to double the amount without any tax liability.
Gift-splitting refers to a tax strategy where a married couple can combine their individual gift tax exclusions to make larger tax-free gifts. It allows them to double the amount of money they can give to an individual without incurring gift tax.
Under gift-splitting, one spouse can make a gift to an individual and elect to treat it as if it were made equally by both spouses. This allows the couple to effectively double the annual gift tax exclusion amount.
As of 2021, the annual gift tax exclusion amount is $15,000 per person. Therefore, with gift-splitting, a married couple can jointly give up to $30,000 to an individual without triggering gift tax.
Yes, gift-splitting is only available to married couples who are both U.S. citizens or residents. Non-resident aliens and unmarried couples cannot utilize gift-splitting.
If the total value of the gifts made by both spouses exceeds the annual gift tax exclusion amount, a gift tax return (Form 709) must be filed. However, no gift tax will be owed unless the combined lifetime gifts exceed the lifetime gift tax exemption, which is currently $11.7 million per person.
No, gift-splitting is only applicable to gifts made to individuals. Charitable donations have separate rules and limitations for tax purposes.
Yes, gift-splitting can be used for gifts to children or grandchildren, as long as they are individuals and not organisations or charities.
Yes, gift-splitting can be used for gifts of property or assets, as long as the fair market value of the gift does not exceed the annual gift tax exclusion amount.
Yes, gift-splitting can be used for gifts to non-U.S. citizen spouses, as long as they are residents of the United States.
No, gift-splitting can only be applied to gifts made in the current calendar year. It cannot be used to retroactively split gifts from previous years.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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