Although there is no gift tax in Pennsylvania, there is a federal gift tax. A gift, according to the IRS, is a property transfer in which the giver does not get payment equivalent to the item’s full market value. Gifts may be made in the form of cash, real estate, or other valuable assets.
According to the federal gift tax rules for 2022, you may give as many individuals as you like gifts of up to $16,000 per year without having to submit a gift tax return. Therefore, you are exempt from reporting gifts of up to $16,000 made to each of your children in 2022. Even though you must submit a gift tax return for any gifts that exceed the allowed annual amount, this does not guarantee that you will have to pay gift taxes.
A lifetime exemption is a limit on the total amount that may be given over the course of a person’s lifetime before gift tax is applied. Gifts made as part of an estate are also included in this total limit. The majority of people do not have to worry about paying taxes, even on money that is beyond the permitted annual amount, since this lifetime exemption in 2022 is now 12.06 million.
Of course, it is important to talk about your specific situation with a knowledgeable estate and tax lawyer who can better aid in counseling you on 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.