Episode 91: In this episode, Timalyn talks about the gift tax and why it matters when you're giving money or property. She explains what can be considered a gift, the annual exclusion, Form 709, and how gift tax can also come into your estate planning. What is the Gift Tax? First things first, the gift tax is a tax on the transfer of property from one person to another when the person receiving it gives nothing, or less than the full value, in return. Timalyn uses the example of giving a family member a vehicle worth $20,000 and letting them pay only a small amount for it. What can be considered a gift? It doesn't have to be real estate. Timalyn explains that a gift could be a vehicle, computer, appliances, money, or even income from an asset. She gives the example of parents giving their children the income from a rental property when the children are not providing anything in return. What is the Annual Gift Tax Exclusion? For 2026, the annual gift tax exclusion is $19,000 per person. If a married couple is filing jointly and gives a joint gift to an individual, that exclusion is $38,000. Timalyn gives the example of a couple buying their son a $36,000 car. Since the amount is under the $38,000 exclusion, they would not have to report that gift. What happens if you go over the exclusion? If you go over the annual exclusion, the donor may need to report the gift on Form 709, the Gift Tax Return. But check this out. That does not automatically mean you're going to pay gift tax. Timalyn explains that the lifetime gift tax exemption also comes into play. For 2026, she explains that the lifetime exemption is $15 million per individual. For example, if the same couple bought a $50,000 car, they would still exclude the $38,000 annual exclusion. The remaining $12,000 would be reported on Form 709 and would chip away at their lifetime exemption. What about Estate Planning? If you have significant assets, Timalyn recommends discussing gift planning with a financial advisor and qualified tax professional. She also reminds listeners that state rules can be different. Timalyn will talk more about estate taxes in Episode 92. And this isn't just for people with millions of dollars. Timalyn gives the example of inheriting a home and then deciding to give that home to your child. The transfer could still create a gift tax filing requirement because the home may be worth more than the annual exclusion. What isn't considered a gift? Timalyn explains that paying someone's education expenses or medical expenses is not considered a gift for gift tax purposes. She also talks about charitable contributions. Giving to a charitable organization is different from giving a gift to an individual. For more information, check out Charitable Contributions episode, where Timalyn discusses charitable contributions and the updates from the One Big Beautiful Bill Act. Need Tax Help Now?If you need to file a Gift Tax Return or have questions about gifting money or property, Timalyn invites you to book a paid consultation through Bowens Tax Solutions. Visit: https://www.bowenstaxsolutions.com/ As we conclude Episode 91, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms. Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode. For more information about tax relief options or filing your taxes, visit: https://www.bowenstaxsolutions.com/. If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
