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Tuesday, December 19, 2017

The Importance of Giving This Holiday Season

“In everything I did, I showed you that by this kind of hard work we must help the weak, remembering the words the Lord Jesus himself said: ‘It is more blessed to give than to receive.’” -Acts 20:35

Like so many scripture lessons, this one grows more poignant as you get older. As a child, you were excited for Christmas because you hoped Santa would bring you everything on your list. Now, you take more joy in seeing your children and grandchild open gifts than you get from opening gifts yourself. 

Our firm works with many people who are at this stage in life. They have worked hard, and are now ready to share the bounty they have been blessed with. At this time of year, we touch base with many clients to remind them how important it is to gift thoughtfully this holiday season. Gifting too little and too much both have negative tax consequences. 

Gifting Too Little 

Gifting is one of the easiest ways to reduce tax liabilities at death. Plus, it is nice to enjoy the act of gifting and watch your loved ones use what you are giving them.

Gifts can be used to fund trusts, pay for education, and otherwise benefit loved ones without giving Uncle Sam more than he deserves. Each person can gift another person $14,000 tax free each calendar year. Couples can combine their gifts so $28,000 is passed tax free. This may seem like a small amount when you hope to pass many millions tax free, but done consistently, and over time, it adds up. 

The $14,000 cap resets each year and does not roll over, so if you don’t gift the full amount this year, your ability to take advantage of that year’s gift tax exclusion disappears.  

Loved ones who are too young, or otherwise unable to accept such a gift, can be the beneficiaries of a gift to a special trust established to benefit them.

Gifting Too Much

If a gift breaks the $14,000 threshold, the gift-giver, not the gift-recipient will be the one taxed. It is easier to go over this limit than you may think. Most cars, for example, are worth more than $14,000. Taxes and the associated paperwork are not really what you want to be thinking about during the holiday season, but it is important to keep track of how much you are gifting so that it can be properly reported.

Gifting different types of assets may also result in a tax bill. For example, non-cash assets have their current tax basis gifted along with them. If the gift is later sold, the gift-recipient will be responsible for paying the taxes on the change in value.  If these same assets were passed at the time of death, they would get a step up in basis, and the tax bill at sale would be lower. This is something to thinking about when considering giving stock or property. It is often better to have such assets pass at death for tax purposes.


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Monk Law Firm, PLLC assists clients throughout Charlotte, Rock Hill, Fort Mill and the surrounding areas.



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| Phone: 803-594-4453
13315 Carowinds Blvd., Suite Q, Charlotte, NC 28273
| Phone: 704-369-9977

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