My jackpot money is cleared in the bank with all its federal/state/city/village/building taxes paid in full. Now I want to start giving money away. What will be the tax implications if I give or donate more than X per year? I heard something about you have to pay an extra 35% on top of it, so let's say you gave away 10 million to people, you would have to give an extra 3.5 million to uncle sam. Is that correct?
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1 Answer
It is correct, in general. Gift tax is indeed at 35%, but you have the first 14K of your gift exempt from it for each person you give to, yearly (verify the number, it changes every year). You can also use your lifetime exemption ($5.45M in 2016, subject to change each year), but at the amounts you're talking about it still will not be enough.
Charitable (501(c)) organizations, paying for someone's tuition or medical expenses (directly to the providers), political donations, transfer between you and your spouse - these are all exempt from gift tax.
If you have 10 millions to give, I'm sure you can afford a $200 consultation with a EA/CPA licensed in your state.
answered Dec 17, 2013 at 16:32
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So as long as you donate less than 5.45M during your whole life you are ok? Commented Dec 17, 2013 at 17:02
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15.45 comes out of your estate tax exemption. So you're ok, your heirs aren't. Commented Dec 17, 2013 at 20:43
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"5.45 comes out of your estate tax exemption" that's a bummer!– RonJohnCommented May 22, 2017 at 19:29