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The Gift Tax Is Ridiculous
Posted By Jim On 06/05/2007 @ 8:21 am In General | 22 Comments
Let’s say you have a job and let’s say this job pays you well enough that you can send gifts to whomever you want. Let’s say one of these gifts is a hundred bucks to your cousin because he just had a confirmation, bar/bat mitzvah, or other such teenage celebratory rite where a hundred dollar gift would be appropriate. Let’s say the government decided that they wanted to start taxing you for that gift… wouldn’t you say that’s ridiculous? I mean you already paid income tax, state and federal, social security and medicare taxes on that money. Your employer also paid all the necessary payroll taxes on that money too, so why is the government entitled to take even more?
Well they are and the rule is that any gift amount over
$10,000 $12,000 (thanks everyone!) made to anyone that is not your spouse is subject to a gift tax. If your spouse is not a US citizen, then the gift tax applies as well. The first million dollars you give over the annual limit is excluded from the gift tax.
Let’s say you gave $12,001 in gift money this year to your lucky cousin, your lifetime million dollar exclusion is decreased by $1, not $12,001. This million dollar exclusion is shared by your $2,000,000 estate tax exclusion, so after the generous gift to your cousin, you can only pass through $1,999,999 to your heirs tax free.
While the dollar amounts are high and it’s likely it may never affect you, I still think it’s ridiculous and unfair.
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