Pennsylvania does not have gift tax however, there is a federal gift tax. The IRS defines a gift as a transfer of property from one individual to another, where the giver does not receive payment for the full market value. Gifts can include things like money, property and any other assets of value.
Under the 2022 federal gift tax guidelines you can gift up to $16,000 per year, to as many people as you want, before a gift tax return is required to be filed. This means you could gift up to $16,000 to each of your children in the year 2022 without having to report it. Though you are required to file a gift tax return for anything over the allotted yearly amount, that does not mean you will actually end up paying gift taxes.
There is what is called a lifetime exemption, which is a limit on the total amount someone may gift throughout their lifetime before they begin to pay gift tax. Gifts left through an estate also count towards this overall limit. This lifetime exemption in 2022 is currently 12.06 million, so most individuals do not need to be concerned with paying taxes, even on money that is over the allotted yearly amount.
It is of course best to discuss your individual circumstance with an experienced estate and tax lawyer who can better assist in advising you with these matters.
If you have any questions about the topic discussed in this video, or any estate law matter, please give us a call at Bononi & Company 724-832-2499.