Yes. Under federal gift-tax rules, you can give a certain amount each year to as many individuals as you wish without using any of your lifetime estate-and-gift-tax exemption and without filing a gift-tax return (in most cases).
The annual gift-tax exclusion is adjusted periodically for inflation. (For recent years it has been in the high teens of thousands of dollars per recipient; check the current IRS figure for the year you are making gifts.) Married couples can often combine their exclusions (gift-splitting) to double the amount.
Gifts that qualify for the annual exclusion are generally removed from your taxable estate.
Additional strategies include:
- Paying tuition or medical expenses directly to the provider (these can be unlimited and do not count against the annual exclusion)
- Contributions to 529 plans (with special five-year election rules)
- Using your lifetime exemption for larger gifts (which requires a gift-tax return and reduces the amount available at death)
Arizona does not impose its own gift or estate tax, so the relevant rules are federal. Annual gifting can be a simple and effective way to transfer wealth during life, but it should be coordinated with your overall estate plan, especially if you have a taxable estate or complex family situation
Legal Disclaimer: This blog is for informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship with Fountain Hills Law Firm. Legal outcomes vary based on individual circumstances, and readers should consult an attorney regarding their specific situation.
