Long Island estate planning attorney Seth Schlessel (https://www.schlessellaw.com/how-does-new-york-state-gift-tax-work/) releases a new article explaining Gift Tax Exclusions and Lifetime Exemptions in New York. The lawyer mentions that gift taxes are an obligation that a person must pay in order to transfer property to another person. They do not receive fair market value. Gifts exceeding a certain value might be subject to taxes. New York does not have a gift tax, but residents must pay federal gift taxes.
“The gift tax is imposed on any transfer of property in which the person receiving the assets or property does so without receiving cash or equivalent value in exchange. Even though New York does not require residents to pay a gift tax on assets and property given away to beneficiaries, the federal government does impose the tax on gifts once they exceed a specific amount,” the Long Island estate planning attorney says.
The lawyer mentions that gifts exceeding the annual exclusion do not automatically make a person liable for taxes. Every taxpayer also has a lifetime gift- and estate exemption. The lifetime exemption limit in 2023 has increased to $ 12.92 million, up from $ 12.06 million in 2022. An individual can file an exemption gift tax return for the amount taxable and still avoid paying taxes because of the lifetime exemption.
A person who exceeds the annual exemption amount would have to file Form 706 and report the gift to IRS. If a couple is a US citizen they will be able to enjoy unlimited marital exemption. They would not need to worry about the annual limit. If both spouses want to share assets, they may be eligible for the combined exemption. This is known as gift splitting. This also applies to legal married same-gender partners who are not registered domestic partners or civil union couples.
In the article, the lawyer further explains, “If your spouse is not an American citizen, you would have to file a gift tax return individually. A citizen spouse can give a non-US citizen spouse up to $175,000 in 2023. Anything above that amount would be considered taxable under the gift tax exclusion. While most Americans wouldn’t have to deal with the federal gift tax, it is not overly difficult to calculate for those who do have to pay them. Gift tax rates are calculated using margins with the maximum rate reaching 40%.”
Lastly, attorney Schlessel emphasizes that having an estate planning lawyer is important in order for the client to save money while also planning their future in an efficient manner.
About Schlessel Law PLLC
Seth Schlessel is the founder of Schlessel Law PLLC. As a skilled estate planning attorney, Mr. Schlessel understands the importance of a comprehensive estate plan for a family’s future. He and his team have helped many families preserve their assets and ensure that a person’s wishes are carried out the way they want. Aside from estate planning, the firm also helps with elder law, personal injury law, and startup/corporate law. Contact them today to learn more.
Schlessel Law PLLC
34 Willis Ave Suite 300