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Slam the brakes on gift tax liability

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I’m giving my granddaughter my Toyota Camry valued at $17,000. Can my wife join in the gift to avoid gift tax? J.A., Bristol, Conn.

A. Yes. Normally, the annual gift tax exclusion for 2011 is $13,000 per recipient. However, a married couple can jointly give gifts to a recipient valued up to $26,000 without paying any gift tax. If gifted property is legally owned by just one spouse, the spouse who doesn’t own any interest in the property can elect to “split” the gift by making an election on a federal gift tax return. Then the gift is treated as being made equally by both spouses.

Tip: You will have to file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, for 2011.

{ 1 comment… read it below or add one }

pjames December 26, 2011 at 11:00 am

Husband and wife each have to fill out Form 709, not Form 706. 706 is for estate tax, 709 is for gift tax.


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