To help you close out 2005 on the best note, we
are sending out a four part series. Expect one
every other day until the end of the year.
Part Three
This year you can give gifts of up to $11,000
to as many individuals as you want without being
liable for gift tax. The 2005 annual gift tax
exclusion expires December 31, so if you want to
take advantage of this tax break, you'll have to
act fast.
You can put the gift tax exclusion to good use
in several situations. For example, you could use
a multi-year gift program to decrease the size of
your estate and reduce estate taxes.
You could also use the gift tax exclusion in an
income-shifting strategy. You could make gifts of
income-generating assets to your child who is in a
lower tax bracket. If done carefully to avoid the
kiddie tax, the result can be a lower overall tax
bill for the family unit.
Two types of gifts are exempt from the $11,000
limit. You can make unlimited gifts for tuition
expenses or medical expenses on behalf of any
person, provided you make the payments directly to
the educational institution or health care
provider.
Contact our office if you would like more
information on using the 2005 gift tax exclusion.
