How to Give a Tax-Free Gift
Dear Dr. Don,To give a tax-free gift of $13,000 or less to a person, does it have to be a relative or can it be anyone? For example, would my daughter's husband be eligible?-Richard Relation
Dear Richard,First, you should consider your daughter's husband a relative. He's your son-in-law. Second, you're talking about the annual exclusion amount from gift taxes. It's $13,000 per gift for the 2010 tax year, the same as 2009 and 2011, and you can give to anyone you'd like and you won't owe a gift tax on the gift.
If you are married, both you and your spouse can separately give gifts valued at up to $13,000 to the same person in 2010 without making it a taxable gift. If one of you gives more than the $13,000 exclusion to a person in 2010, see the section on Gift Splitting in IRS Publication 950, Introduction to Estate and Gift Taxes.
It spells out that, "If you split a gift you made, you must file a gift tax return to show that you and your spouse agree to use gift splitting. You must file a Form 709 even if half of the split gift is less than the annual exclusion."
It's getting pretty close to the end of the year. Don't wait until the last minute. The transfer of the cash or asset has to happen before Dec. 31, 2010, for it to be considered a 2010 gift.Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.
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