Countless individuals make gifts to charity every year not only to support their favorite philanthropic causes but to also take advantage of tax savings in the form of a deduction on their 1040 income tax return. As you may be well aware from conversations with your accountant or tax preparer, there is no similar income tax deduction for gifting to one’s children and loved ones. However, there are potential estate tax benefits for making such gifts that you may want to consider.
What is the “Gift Tax” Anyway?
Any direct or indirect transfer to an individual where full consideration (measured in money or money’s worth) is not received in return is considered a gift. All gifts are “taxable” unless they fall within one of the exceptions discussed below.
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