Kennewick Gift Tax Lawyers
People give others gifts for a variety of reasons. Parents may gift their new college graduate with something of substantial value, such as a vehicle. Or, a person may even gift someone real estate property to reduce their overall state and federal taxes. It is for this latter reason that many states and the IRS have established a gift tax that holds taxpayers liable for paying the full amount of taxes they are responsible for. Below, our Kennewick gift tax lawyer explains the law in Washington, as well as federal law, so you can fully understand any obligations placed upon you.
What is a Gift Tax?
Gift taxes are imposed by state or federal law on taxpayers who transfer property to another person without receiving any compensation or property of substantial value in exchange for it. Gifts include property such as real estate, case, and other forms of assets. The IRS limits the value of gifts one person can transfer to another. Any gifts given to a person over this amount must be reported and applied toward a lifetime gift tax exemption. After this limit has been exceeded, the gift tax will apply. Gift taxes can apply even if the transfer was never intended to be a gift.
Gifts and Exemptions
Again, most property that is transferred from one person to another without the giver receiving any compensation in exchange is considered a gift. Some of the most common types of gifts include art, real estate property, cash, securities such as stocks and bonds, and vehicles. However, there are some items that are not considered gifts and therefore, are not subject to the tax. These include:
- The medical expenses of another person
- The educational expenses of another person
- Spousal gifts
- Donations and gifts made to political organizations
The State and Federal Gift Tax in Washington
Washington does not outline a gift tax in state law. As such, residents of the state can give gifts as they please without worrying about state taxes. However, Washington residents are still subject to the federal gift tax.
The IRS limits the value of gifts given yearly, as well as during a person’s lifetime. The yearly limit in 2023 is $17,000 but it changes regularly. This means a person can gift up to $17,000 in property without worrying about paying taxes on it. The lifetime limit is $12.92 for 2023.
However, it is important to note that you may still have to pay state gift taxes even if the gift was received in Washington. For example, Pennsylvania has a state gift tax. If someone in Pennsylvania gave you a gift, you will have to pay the appropriate tax even if you were in Washington when you received it.
Our Kennewick Gift Tax Lawyer Can Advise On Your Case
If you have received a substantial gift and are worried about paying taxes on it, our Kennewick gift tax lawyer at Moulton Law Offices, P.S. can advise on how much you may owe, and how you can minimize the taxes. Call us now at 1-509-328-2150, #9090 or contact us online to book an appointment and to learn more.