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Did you know that giving someone a gift may require you to file a gift tax return and possibly pay taxes? It can be confusing knowing what types of gifts are taxable, but it’s important to know the details so you aren’t withholding too little an amount from the IRS. The team of accountants at Joe Heard, CPA, in Checotah, OK, explain when you have to declare a gift and when you may have to pay taxes for giving or receiving a gift.

Do You Have to Declare Your Gift?

The person who makes the gift is usually the one who must file a gift tax return and pay any tax if required. However, not every gift triggers the need to file a return. In 2016, the gift tax exemption was $14,000, but this number may change for 2017. The giver only has to file a gift tax return if they give more than that maximum amount.

The recipient must file Form 709 to declare any gifts they have received. Some gifts may be deductible on your return. However, business gifts are limited to $25 per year per recipient and can be deducted up to that amount on your income tax return by your tax accountant.

accountantWho Pays Taxes on the Gift?

Gift tax is tricky. For one, there is an annual exclusion that applies to each recipient, which is the aforementioned amount of $14,000. Gifts above that number require a gift tax return and in some instances, the payment of gift tax. There is also a maximum lifetime amount—$5.49 million per individual for 2017—that an individual can give away tax-free, without paying either a federal estate or gift tax.

Do you have a question about gift taxes for your accountant? Give Joe Heard, CPA, a call at (918) 473-1492 to discuss your tax liability. His team can help you with your tax return preparation and your estate planning to ensure that you’re not paying more taxes than you’re legally required to. To learn more about the services this certified public accountant offers, visit the website.

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