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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

  • Writer's pictureClay Reynolds

What is Gift Split, should I Gift Split, and when should I Gift Split?

What is considered a gift?

Before deciding to gift split, understanding what qualifies as a gift is essential. Gifts can include money, real estate, antiques, other items, and other assets. It is important to remember that only gifts of present interest qualify for the gift tax exclusion. To be considered a present interest gift, the donor must have all immediate rights to use, possess, and enjoy the property (real estate, boat, tractor, etc.) or income gifted. Items that typically do not qualify as gifts are items used for education or medical purposes and gifts made to political organizations.


Gift Tax Exclusion

The gift tax exclusion for 2023 is $17,000.

The gift tax exclusion for 2024 will be $18,000.


For example, if you give your cousin $20,000 in cash, you can exclude $17,000 from being subject to the gift tax.


However, if you put $20,000 into a trust for your cousin, then all of that gift is subject to gift tax because that is a gift of future interest.


You can use that exclusion once for every donee you gift for the year. This means that if you make multiple gifts to your brother, you can still only exclude $17,000 for the year for all gifts given to your brother. However, if you gift $15,000 to your mother in the same year, you can exclude it as it is below the exclusion and the only gift made to your mother for that year.


What is gift splitting?

By splitting gifts, married couples can double their gift tax annual exclusion, meaning they can now make gifts up to $34,000 without paying gift tax. This number increases yearly as the annual gift tax exclusion does. The gift-splitting annual number is double whatever the gift tax exclusion is for the current year. It is important to remember that only legally married couples may elect to gift split. Those filing as individuals may not gift-split.


For example, You and your spouse give gifts to your children. Your total gift amount is $20,000. Your spouse's total gifts are $14,000.


Without splitting gifts, your spouse's contribution is wholly excluded as it falls under the annual exclusion. However, the $3,000 of your gift above the annual exclusion ($17,000) is subject to gift tax. If you elected to split gifts for the year, then each spouse is deemed to make an equal gift, and you could exclude all $34,000 and not pay gift tax. Once you make an election to split gifts, you must split ALL gifts to third parties for the year. You must file a form 709 if you choose the gift-splitting option. The filing date for form 709 is April 15th, plus extensions. If you file a form 709 for gift splits, your spouse must also sign to give consent to split gifts on line 12.


A common way that people avoid gift tax is by spreading out their gifts over several years. By doing this, they can stay below the gift tax exclusion. If a married couple elects to split gifts, they can double that exclusion for all gifts during the calendar year. This increases the amount that can be given over a number of years without incurring gift tax.


Why would I gift split?

Many people like to do their gifting while they are alive instead of having it come from their estate. There are multiple reasons for this. One of the main reasons for giving to loved ones while you are alive is that it allows you to see them enjoy the money or gift that you gifted. You can see them reach a goal sooner because of your gift and witness the blessing you were able to have on their life. This joy from gifting cannot be experienced if all your gifts come from your estate (after you pass). The second reason is that it allows you to lower your taxable estate so that more money goes to your heirs instead of the government. It is always important to ensure you are financially secure before executing lifetime gifts.


Conclusion

Gift splitting can be advantageous for married couples who wish to give a portion of their wealth to others. However, many rules come along with gift splitting. If you think gift splitting would benefit you, it is essential to talk to your financial advisor, who will be able to personalize this tactic for your situation.

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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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