Federal Gift Tax limit for 2009, 2010

If you give away a lot of money, then you could be responsible for paying federal gift tax. Currently you can give away around $12,000.00 to any amount of people without having to pay federal gift tax.You also have a one million dollar lifetime limit on gifts.

If you plan on giving away more than that then you may want to do some pre-planning so neither you nor the recipients of your gifts owe taxes on them. The gift tax was created to make it more difficult for taxpayers to avoid paying estate tax.

Here are some helpful tips when giving away large amounts of money or assets:

• You and your spouse can give away up to $24,000.00 annually to any number of people.

• You have a lifetime limit of $1,000,000.00 to give away tax free.

• The gift cannot have any exclusions and is money or property given away without an expected return.

• If you must claim the federal gift tax on your gifts then you must file using Form 709.

• Giving away property or money before your death can provide a huge tax savings to your friends and family.

• If you pay someone else’s medical expenses then you must pay them directly to the care provide for them to be considered a gift.

It is also important to know that gifts of educational expenses will not be taxed under the federal gift tax rules. This includes payments directly made for education, books, supplies, and other related living expenses. Charitable gifts and gifts to your spouse are also not taxed.