Why do you Have to Worry about Gift Tax?
Well, you probably won’t have to worry about gift tax. Most people don’t, but the reason it’s there is so that people can’t make deathbed gifts and get rid of their estate for tax purposes.
The gift tax works in conjunction with the Federal Estate and Gift Tax. It’s all one thing. And so the reason being that you know, if technically you had $20,000,000 and some of it would be taxed at your death, and there at your deathbed, you know you’re going to die tomorrow, you give it all away to like your son and then take it all out of your estate.
The estate tax wouldn’t work if you could do that, so they make it so that if you make gifts over the annual exemption amount, which is $16,000 in 2022, you need to file a gift tax return. Gifts in excess of the annual gift exclusion amount go against your lifetime gift and estate exemption. So if you make a big gift this year, all it does is brings down the amount that is exempt later, so you still have that whole total amount and so if you are concerned about these things, give us a call (267) 573-1019.