2013 Gift Tax Exclusion

The annual exclusion for gifts increased by $1,000 to $14,000 for 2013. This limit applies to the total of all gifts, including birthday and holiday gifts, made to the same individual during the year. However, any payment made on behalf of an individual as tuition directly to a qualifying educational organization or for medical expenses directly to a medical care provider (e.g., doctor, hospital, etc.) is not subject to the gift tax and, therefore, is not included in the $14,000 limit.

Tax Planning Tip: When paying large medical bills for parents or persons other than dependent minor children, taxpayers should make the payment directly to the medical service provider. Don’t give the funds to the parent or other individual first and have them pay the doctor or hospital. By doing so, you have made a gift to that person, subject to the $14,000 limit.

Please contact Martini, Iosue & Akpovi by phone at (818) 789-1179 if you have questions or want more information.

 

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