Comments on: The Gift Tax Is Ridiculous

By: cubiclegeoff

cubiclegeoff — Tue, 01 Mar 2011 14:19:10 +0000

I could be wrong, but I believe it’s your income tax rate. Except if it’s part of an estate.

By: Daryl

Daryl — Tue, 01 Mar 2011 07:27:56 +0000

What happens after you hit your million dollar limit? what is the tax rate on the gift then?

By: Dark Space

Dark Space — Sat, 17 Jul 2010 15:16:49 +0000

That’s silly logic. If you’re trying to get around paying the house cleaner taxes, just pay them in cash and don’t report it – why would you try to disguise it as a gift?

By: Herb the Swamp Rat

Herb the Swamp Rat — Wed, 30 Jun 2010 14:40:54 +0000

I completely agree with you that the Gift Tax is pure nonsense. Along with many other Taxes where the Government ask for a portion of our money.

The Great news is, there is a very easy way to get around all this… Simply use CASH.

If you want to give someone a gift of $12001.00 you simply open your safe that you keep in the hidden room in your house. Count out $12001 in Beautiful Cash and gift wrap it in a nice box for Jimmy to open on this Celebration Day!!

You also instruct him that he should not deposit more than $3000 at a time into his bank account per month.

There you go, ZERO Tax rate!!

By: Cara

Cara — Thu, 13 Dec 2007 05:15:05 +0000

Another loophole would be for them to sell you something. A personal sale of any cheap little trinket. I’ve personally never had the gift tax situation, but a few others in which gift giving was not allowed, but in the opposite situation I’ve sold some friends things for say, $1.

By: Brandon

Brandon — Fri, 08 Jun 2007 19:00:30 +0000

I have to disagree. Although I think the present tax system is far too complex, a gift tax is no more absurd than a wage tax or a sales tax. All three tax the transfer of financial wealth from one individual to another. At least with the wage and sales tax it is actually an even swap (work or goods for money) whereas the gift tax there is no quid pro quo. Since gifts, excluding charitable gifts, (theoretically) have little if any benefit to society compared to employment or the exchange of goods, wouldn’t it actually make sense to tax gifts even more than the other two.

By: Tim

Tim — Wed, 06 Jun 2007 14:28:21 +0000

correct about trusts. same goes for any other thing you are trying to not pay tax on…seek pro advice. there are many things you can do to avoid gift and estate taxes. if you have substantial assets that exceed your ability to give gifts to beneficiaries, then i’d seek an estate planner/lawyer/etc to go over specifics for your situation.

By: Chris

Chris — Tue, 05 Jun 2007 20:10:04 +0000

For more information about the gift tax, the IRS site has a helpful brochure

http://www.irs.gov/pub/irs-pdf/p950.pdf

A married couple can make a $24,000 gift to anyone without tax liability. In addition, you can make up to the annual exclusion amount to any number of people. The exclusion applies to each individual person you give a gift to.

So a married couple in any given year could give $24,000 to a friend, $24,000 to his wife, and $24,000 without incurring a gift tax. Even if you do exceed the exclusion, you can apply for a unified gift credit and not owe a gift, which based on the 1 million limit ends up being somewhere around $340k in taxes.

If you don’t use up that $340k by the time you die, you can also apply it to reduce your estate taxes. Not sure how that works.

Of course I’m not a tax attorney so I may have misunderstood some things in the document.

By: LAMoneyGuy

LAMoneyGuy — Tue, 05 Jun 2007 18:52:14 +0000

A note to those suggesting that the creation of a trust will avoid gift taxes. Talk to your local estate attorney. The most common type of trust that individuals and families draft, the revocable living trust does not avoid estate or gift taxes. In fact, it does not attempt to do so. It is a will substitute, intended to avoid or reduce probate.

By: fivecentnickel.com

fivecentnickel.com — Tue, 05 Jun 2007 17:52:08 +0000

Yeah, the gift tax exclusion is $12k, not $10k.

By: jim

jim — Tue, 05 Jun 2007 17:27:40 +0000

Yeah… kinda…

Repeal the Estate Tax

By: D

Tue, 05 Jun 2007 16:34:59 +0000

I agree with your theory of double taxation. I see others pointed out the limits were higher than your post. Just thought I’d give you a link to the IRS where you can verify.

http://www.irs.gov/newsroom/article/0,,id=107815,00.html

Then, let me leave you with one thought – Forget about the gift tax limitations, create a trust and pass all your assets without taxation or legal fees.

By: Tim

Tim — Tue, 05 Jun 2007 15:05:53 +0000

put it into a trust and don’t worry about it then.

By: dong

dong — Tue, 05 Jun 2007 14:50:14 +0000

I think Kurt makes a great point. The main reason for th Gift Tax is to allow enforcement of other taxes, mostly Estate and Income. When you start arguing about taxes it becomes an extremely slippery slope where you end up with no taxes or purely consumption taxes. I’m not anti-tax, far from it, I don’t think as a well off citizen that I’m unduly burdened. At the same time, I do think pure consumption (or VAT tax) system is on paper better. However from an implemenation stand point especially if you don’t want the VAT to be onerously regressive in nature can be a execution nightmare.

By: broknowrchlatr

broknowrchlatr — Tue, 05 Jun 2007 14:39:02 +0000

I agree, it is absurd. There are also so many loopholes that make it dumb that such a thing exists.

1) Married and want to give another couple money? Give the Man $12k and the Woman $12k on Dec 31st. Have your sprouse also give the man $12k and the woman $12k on the same day. Then, do the same on Jan 1. You have now given them $96k tax free.

2) Charitable donations. I don’t know exactly how this works but there are some ways you can make yourself a charity and donate X dollars to it. Then have that charity give money to ‘people in need’.

There are others.

I’m not too concerned. I won’t be giving anyone a ton of cash anytime soon .