2011 Gift Tax Limit

What is the gift tax limit? How much money can you give away without being taxed? The gift tax limit 2011 amount is $13,000. If you are married it’s $26,000. You and your spouse “together” can give $26,000 away without ever paying gift tax. There is a lifetime limit of $5 million for the tax year 2011. When you use TurboTax 2011 to prepare your tax return, they will fill in all the right forms for you and guide you to any exemptions, deductions and credits you quaslify for.

If you read the information on the IRS web site you will know that they say the gift tax limit is one of the most complicated tax laws to understand. If the IRS is saying that we had better believe it. Wouldn’t you think the recipient of the gift would have to pay the gift tax? It is actually the giver that pays the gift tax unless special arrangements are made through an attorney or accountant.

In your lifetime you can give away up to $5 million without paying gift tax in the tax year 2011. The lifetime limit for giving was $1 million in 2010. This is how the gift tax limit works. The amount you give over the gift tax limit is the amount you have to add up towards your lifetime limit of gifting. You will have to fill out tax form 709 which is the United Gift Tax Return form. The IRS will keep a tally of your lifetime gifting amount.

Here’s and example of the Gift Tax Limit:

If you give $15,000 each to ten people in 2011, you’d use up $20,000 of your $5 million lifetime tax free limit.

Your annual gift limit is $13,000 per person who receives the gift. If you gave each $15,000 you would have exceeded your annual gift tax limit by $2,000 per person. $2,000 times 10 people is where the $20,000 comes form. Now you have used up $20,000 of the $5 million you are allowed to give away gift tax free.

Did you know there are some gifts that are tax free? Let’s define the word gift according to Wikipedia. A gift is the transfer of something without the expectation of receiving something in return. The IRS says, “Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return.” If you’re in the giving mood you can give away $13,000 to as many people as you would like without paying one penny of gift tax.

There are gifts that are not subject to tax.

Gifts Not Subject to Tax:

• Charitable Gifts
• Gifts to a Spouse
• Gifts for Educational Expenses
• Gifts of Medical Expenses
• Gifts to a Political Organization

There are also transactions that are not considered gifts.

To summarize this information about gift tax please remember and I quote the IRS, “The laws on Estate and Gift Taxes are considered to be some of the most complicated in the Internal Revenue Code. For further guidance, we strongly recommend that you visit with an estate tax practitioner (Attorney or CPA) who has considerable experience in this field. You may also find additional information in Publication 950 or some of the other forms and publications offered on our Forms Page.”

TurboTax can help you with your tax forms, tax preparation, and tax filing. The guidance you will receive will give you peace of mind knowing your income tax return is prepared and filed accurately. Let TurboTax help you with the complications of the Internal Revenue Code to obtain the biggest tax refund possible or least tax owed. You will also find quite a bit of information about the gift tax limit for 2011 through the search box on the support tab of their web site.