Gift Tax: Why Giving Away $15,000 Is a Trap For the Unwary
Have you ever heard that you can give away up to $15,000 per person per year to avoid gift tax?
Spoiler alert: the government gives with one hand and takes away with the other.
Giving away money and things is actually a lot trickier than you may realize. There are so many times when somebody will come into my office, and they'll say something to me like, "Oh, but I know that you can give away 10,000 or 11,000 or 15,000 per person per year, and It'll be okay!". However, that statement is very problematic.
First, I want to explain what gifting is in the eyes of the law. "A gift is property, money, or assets that one person gives to another while receiving nothing or less than fair market value in return." That seems pretty simple, right? Where people get confused is when they give away certain things that may not seem like gifts.
For example, let's say you want to give your car to your grandchild. You sell it to them "for $1", but according to the vehicle's market...
The Great Grandparent Scam | How To Start Important Conversations With Your Elderly Loved Ones About Various Scams & Elder Abuse.
The FBI estimates that seniors lose more than $3 billion each year to fraud.
So what happens when a beloved grandchild calls, begging for money because a bad thing happened to them. Well, you know the answer. That's why this has to be a family conversation right now.
The following is a story we've heard many, many times. The scammer will call an older person and say something along the lines of:
"Hi Grandma, do you know who this is?"
When the unsuspecting grandparent guesses a grandchild's name that the scammer sounds like, the scammer establishes a fake identity without doing any background research or doing any heavy lifting at all.
Then the fake grandchild will ask for money to solve some unexpected financial problem. Usually, it's something like:
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Overdue rent or bills
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They need their car repaired
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Or they got into trouble and are in jail and need bond
The scammer makes it seem as if their grandchild needs help immediately and is...