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2503(b)
An individual can gift annually $12,000 per person, free of gift tax. Such amount is not included in the total amount of gifts during that year if the donee actually receives the gift or can access it. In other words, such amount is “excluded” from the definition of a taxable gift. Such gifts, although excludable as a “taxable gift”, nevertheless count as a transfer for MassHealth Long Term Care eligibility purposes.
2503(e)
Exclusion for certain transfers for educational expenses or medical expenses. The following transfers are deemed “qualified transfers” and are not treated as “gifts”:
Tuition paid to an educational organization (IRC section 170(b)(1)(A)(ii)) for education or training of such individual (see 2503(e)(2)(A)); (room and board, books and supplies are not included); and
Gifts to any person who provides medical care (IRC 213(a)) as payment for such medical care. Medical costs do not include amounts reimbursed by insurance companies.
Lifetime Exclusion
Current law: The first $1 million dollars, exclusive of the transfers described above, of lifetime transfers are exempt from gift tax. This is known and referred to in the federal tax code as the gift tax applicable exclusion amount.
As stated above, the gift excluded amount is not included in the total amount of gifts during that year if the donee actually receives the gift or can access it. The gift must be a gift of “present interest”. For example, if an individual makes a gift of $42,000 in 2007, ($30,000 above the $12,000 annual exclusion), the taxable portion of the gift is $30,000. Said $30,000 is deducted from the lifetime exclusion remaining. A gift tax return would be required to be filed for the $30,000 gift, but no tax would be due. If the same gift were made to a trust where the donee could not access it, then the full $42,000 would be a taxable gift. |
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Copyright D. R. Silberstein 2009 All Rights Reserved |
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Attorney and Counsellor at Law |
