The amount you can give away each year depends on several factors, including your income, assets, and charitable giving goals.
Here are some key considerations:
- Annual Gift Tax Exclusion: You can give away a certain amount of money each year without incurring any gift tax. This limit is currently $17,000 per person in 2023. You can give this amount to as many people as you want.
- Lifetime Gift Tax Exemption: You also have a lifetime exemption from gift tax, which is currently $12.92 million per person in 2023. This allows you to give away large sums of money over your lifetime without paying gift tax.
- Charitable Deductions: If you donate to qualified charities, you may be able to deduct your donation on your taxes. This can reduce your tax liability and increase the amount you can give away.
- Estate Tax: Giving away assets during your lifetime can reduce your estate tax liability. This can be especially beneficial if you have a large estate.
To determine how much you can give away each year, it's best to consult with a financial advisor or tax professional. They can help you understand the tax implications of your gifts and create a giving plan that aligns with your financial goals.
Examples:
- If you have a high income and want to reduce your tax liability, you might choose to give away the annual gift tax exclusion amount each year.
- If you have a large estate and want to minimize estate taxes, you might choose to give away a significant portion of your assets during your lifetime.
