KansasHawkParticipantStatus: SpousePosts: 13Joined: 09/25/2016
We are wanting to contribute to our daughters 529 accounts this year and wanted to know the max you can contribute to avoid the gift tax? In researching it looks like $30,000 total for all dependents but I wanted to confirm. Any input would be appreciated.
Thanks!January 8, 2019 at 8:57 pm MST #179767ENT DocParticipantStatus: PhysicianPosts: 2890Joined: 01/14/2017
In order to not reduce the estate exemption you would be able to contribute $15,000 per donor to each donee, or $30,000 per child in 2019. You won’t be taxed on additional contributions – it would just reduce your estate exemption. Alternatively, you can lump sum a 5 year amount to the tune of $150,000 max.
See Form 709 and its instructions.DreamgiverParticipantStatus: PhysicianPosts: 683Joined: 03/09/2017
15k is the annual exclusion per child per parents so you and your husband together can gift 30k per child with no forms to fill out or such. But you can actually gift more per child with no tax due. In that case the amount needs to be deducted off the lifetime exemption of $11.18 millionJanuary 8, 2019 at 9:19 pm MST #179771bean1970ParticipantStatus: PhysicianPosts: 445Joined: 07/12/2017
The gift tax is also across accounts for the person (not just 529)…so if you have a savings account for your kid and give the $1000 bucks for birthday (just for easy math)….then you need to subtract that 1K from the 15K (or 30K for married) and left with 14K/29K fo the 529….don’t forget about non-529 accounts (UTMAs, savings accounts) to include in the total.January 9, 2019 at 4:50 am MST #179810MPMDParticipantStatus: PhysicianPosts: 2043Joined: 05/01/2017
This is a great topic on which to educate yourself OP b/c it is so widely misunderstood. If you are MFJ the estate tax doesn’t kick in until $22.4M. There isn’t going to be any actual taxes on any of this right now your gifts over $30k just come off your exemption so if you do $60k your estate tax exemption drops to $22,370,00.00. I think the actual # is slightly different but you get the idea.
It’s mostly about filing an accurate return rather than actual money going or not going to the gov’t.
According to Wikipedia the All-knowing: “In 2018, the exemption doubled to $11.18 million per taxpayer due to the Tax Cuts and Jobs Act of 2017. As a result, only approximately 2,000 people (or 0.0006% of the population) in the US are currently liable for estate tax.”January 9, 2019 at 5:48 am MST #179817jfoxcpacfpModeratorStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 7129Joined: 01/09/2016If you are MFJ the estate tax doesn’t kick in until $22.4M.Click to expand…
Just to clarify a bit – the estate tax is ~$11.2M per person and assets are never split evenly. Examples:
- If the spouse with $15M passes and leaves $1M to SS and $14M to children from first marriage, $2.8M will be taxed
- If the spouse with $15M left all to SS, there w/b no estate tax at the first but tax on $2.8M + all growth at death of 2nd.
- If a spouse with $5M leaves all to SS and the estate grows to $15M at 2nd death, SS will be taxed on $2.8M
- If a spouse with $5M leaves all to SS and the SS elects portability, the estate grows to $15M at 2nd death, SS will owe no tax
- If the joint estate is $22.4M and both spouses die simultaneously with “I love you” wills (leaving all to each other), then $22.4 will be exempt. However, in most cases with large estates, it won’t work that way. The physicians of the FIRE and financially literate movement will all need to be meticulous about estate planning in the future (that means irrevocable trusts during their lifetimes, leaving chunks of assets to charity, etc.) to avoid a massive estate tax hit. At least, that is what 95%+ of our client projections are depicting.
These examples are very generalized and for illustration purposes only. They do not account for growth in the estate tax threshold.
Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555