Are you ready to give significantly but wondering what that will do to your taxes? Understanding your options ahead of time can go a long way when it comes to taxes.
Ready to give a significant financial gift? A gift doesn’t have to be a check, it could be a car or a piece of property. We talk about three different types of gifts and what that means for your finances on today’s episode of the Cover Your Assets KC podcast.
A typical gift is through a charitable donation to a 501(c)(3). Maybe you like to give to your university, church, or local nonprofit. You might get a tax deduction for that as well if you itemize. Some of these tax benefits changed for 2020 and 2021 in order to encourage more charitable giving.
Have you considered making a qualified charitable contribution? This is a way to take money out of an IRA and give it directly to your charity of choice if you’re over the age of 70 and a half. If you do this, your distribution will not be taxed as income if it is gifted directly to your church or charitable organization.
The most common way to think of the gift tax is when a parent or grandparent gives money to their kids or grandkids. But how much will you get taxed if you do that? On gifts of less than $15,000, there is no reporting to the IRS and the person who gets the gift does not have to pay the tax. What happens if the gift is more? You need to fill out the 709 form to report it. David talks through a few exceptions to keep in mind and how those impact your taxes. It’s important to know the rules when it comes to taxes, because some of those rules work in your favor.
Listen to the entire episode or skip ahead using the timestamps below.
0:34 - David has a new grandson!
4:08 - Let’s talk about the gift tax.
5:48 - Do you give money to a 501(c)(3) organization?
7:38 - You can give through a qualified charitable contribution.
9:28 - How much can you give to your kids or grandkids?
12:24 - What exceptions to the rule should you keep in mind?
“If you find yourself in a situation where you do have a lot of net worth and do want to do some significant gifting, a little bit of knowledge will take you a very long way. "
– David Dickens
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CONTACT US
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Overland Park, KS 66210
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