Gift Tax question

[drewmaster]

What is the name of your state?MASSACHUSETTS / PENNSYLVANIA

I just read the following on the "freeadvice" website:

"Taxable gifts generate a Gift Tax. But Gift Tax is not due until you give away over $1,000,000 in your lifetime."

Can someone please confirm that I can give a relative a gift of over $11K and not have ANY tax consequences whatsoever?? (This is assuming that I do not give away over a million dollars in my lifetime, which I won't). Also, why would this loophole exist? It doesn't seem to make much sense.

Thank you.
DC

 

[anteater]

Can someone please confirm that I can give a relative a gift of over $11K and not have ANY tax consequences whatsoever?? (This is assuming that I do not give away over a million dollars in my lifetime, which I won't). Also, why would this loophole exist? It doesn't seem to make much sense.Thank you.
DC

Depends: potential size of your estate, what happens with the estate tax, etc. Take a look at Pub 950 and note the interaction of gift tax and estate tax unified credit.

http://www.irs.gov/pub/irs-pdf/p950.pdf

 

[drewmaster]

thanks!

anteater, this is very helpful. thank you very much.

DC