Year-End Gifting Made Easy
Next year the annual gift tax exclusion will increase from $11,000 to $12,000. The gift tax exclusion is the amount that you can give to as many people as you wish, per year, without paying gift tax or even needing to file a gift tax return.
If you are in a situation where you'd like to make gifts, the end of the year (and the start of the next year) is a good time to do it. Three quick, easy scenarios:
1. You and your spouse have three grown children. (Each child is married and has one child of his or her own.) You and your spouse each give $11,000 to each child on December 31, 2005 and $12,000 to each child on January 1, 2006. You have just given away $138,000 without having to pay gift tax or even file a return.
2. Same facts as in 1., but you also make the same gifts to each child's spouse. That's another $138,000 that you've given away without having to pay gift tax or even file a return.
3. Same facts as in 2., but you also make the same gifts to your three grandchildren. That's another $138,000 that you've given away without having to pay gift tax or even file a return.
