Annual Gift Tax Exclusion: You can give up to $15,000 to any person in 2018 without having to pay gift tax or use up any of your lifetime estate and gift tax exemption. A married couple can give up to $30,000 to any person ($15,000 each) without using up any of their exemption or paying any gift tax. Therefore, a couple could gift another couple $60,000 tax and exemption free. Matter of fact, a couple could gift $60,000 in December and another $60,000 in January, all tax and exemption free.


Charitable Giving: If you donate appreciated property that you have held for over one year to qualified charities you can deduct the full value even though you have not paid tax on the appreciation. This especially works for shares of stock or mutual funds.


IRA owners subject to the minimum distribution rules (over age 70 ½), can satisfy their RMD requirement by transferring up to $100,000 from their traditional IRA directly to a charity. These distributions are not included in taxable income. This is an excellent strategy for those taxpayers that will no longer be itemizing because of the higher standard deduction from the new tax law.


529 Plans: You can shelter from gift tax as much as $75,000 in a single year per beneficiary ($150,000 if you spouse joins in). If you contribute the maximum, you’ll be treated a s gifting $15,000 (or $30,000) to that beneficiary inn 2018 and in each of the next four years. Pay ins are excluded from your estate as long as you live through the fifth year. Note that 529s are no longer just for college. Tax-free distributions of up to $10,000 can now be taken each year to help pay for private of parochial K-12 tuition. The annual $10,000 annual cap doesn’t apply to 529 plan withdrawals to pay for college.


Paying a person’s tuition directly to the school is tax-favored, too. The payment is not treated as a gift for purposes of the gift and estate tax rules.


David M. Snyder, CPA

The Tax Axe, LLLC

September 2018