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What’s the best way to make a gift in 2023?

Many people are unaware that a holiday gift splurge may actually subject the donor to taxes. The Internal Revenue Code imposes up to a 40% flat tax on any gift we make in excess of the annual exclusion, which increased from $16,000 per done in 2022 to $17,000 per donee in 2023. If you give a gift in excess of $17,000 to a single person this year, you are required to file a Federal Gift Tax return to report the gift to the IRS to determine whether a tax is due to the federal government.

One way that savvy planners avoid paying gift tax or the requirement of filing a gift tax return is by gifting no more than the annual exclusion to each donee in any individual year. When a person desires to give more, they might consider writing a check for $16,000 in 2022 and another for $17,000 in 2023. While this may sound like a simple solution, it may not be as simple as one thinks. According to the laws regarding gifting, simply writing and dating a check in a specific year and delivering it to the donee will not necessarily mean that the IRS will consider the gift as taking place in that year. In actuality, the gift is considered to have occurred in the year that the check clears, a little-known fact.

Contact us today to schedule a telephone, video or in-office consultation to learn more about gifting and address your estate planning needs.

This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute legal advice.  For information on your particular circumstances, please contact  Chauvel & Glatt at 650-573-9500 for legal assistance near you. (photo credit: Depositphotos.com)


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