Financial Focus with Robert
Dear Robert, I am thinking of giving my children money each Christmas. My wife and I are retired, both in our late 70’s. We would like to start giving cash to our children and grandchildren. But a friend of mine said that my children and grandchildren might have to pay a “tax” on this gift. Is this true? – Jim in Winston-Salem
Jim, there is such a thing as a “gift tax”. If you are just dealing with money and not property, the 2014 annual gift tax exclusion is $14,000. This is a per gift tax, so you could give $14,000 each to two or more different people. Also, there is a lifetime gift exemption of $5,340,000. If you go over the exemptions the Donor is normally responsible to pay the tax. There are some exclusions to this rule, including the following:
1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone.
3. Gifts to your spouse.
4. Gifts to a political organization.
Also gifts or donations to qualifying charities are excluded.
As always with the IRS, there may be other considerations that need to be addressed about the gift tax. Please refer to IRS publication 559 and/or a tax professional before you begin making your gifts.
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During the Christmas season, many of us focus on giving and receiving gifts. Many of us are blessed well above our needs. I encourage everyone who can, to do something this holiday season for someone less fortunate. Organizations like Crisis Control and the Salvation Army need more help than ever this time of year. Reach out to someone in your church or community who is struggling. I promise you won’t have to look far. And remember it was Jesus that gave the ultimate gift.
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Robert Cooper
CRPC, RFC Registered Investment Advisor Representative / Providing Financial Planning Services in the Triad for Over 20 Years
336-993-2012 • www.coopercares.com
935-E Mountain St., Kernersville, NC 27284
Investment Advisory Services Offered Through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.
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