The Elder and Disability Law Firm, APC Nov. 4, 2014

When you are a young child you invariably look forward to Christmas and your birthday because you know that you will be receiving gifts. Giving someone a gift seems like a very innocent and kind gesture, and the last thing that you are probably thinking about when you consider doing something nice for someone is taxation.

However, most gifts that you give are taxable. Yes, this is true even though you may have already paid taxes on the resources or the item that you are passing along to a gift recipient.

This becomes a serious issue for people who have assets that exceed the unified estate/gift tax exclusion amount.

The good news is that there are some gift tax exemptions that can be utilized that do not count against your available unified exclusion. One of these allows each American to pay the college tuition of students free of the gift tax. You can pay the tuition of as many students as you want to and the sum total of your gifts can equal any amount of money.

This exemption only applies to tuition. If you wanted to pay for living expenses and things like books and fees these gifts would in fact be taxable.

When it comes to books and fees and some living expenses there is an option. In addition to this tuition exemption you can also give as much as $13,000 every year to any number of people free of the gift tax without cutting into your unified exclusion. So, you could utilize this exemption to provide something additional to your student.

If you would like to learn more about using gift tax exemptions, simply take a moment to arrange for a consultation with a seasoned, savvy Grand Terrace CA estate planning attorney.

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