TIP 1:
Annual Exclusion Gifts
You may make
tax free gifts in 2008 of $12,000 ($24,000, if your spouse joins in making
the gift) per person to your family members. Happy Holidays!
TIP 2:
Section 529 College Savings Plan
Do you want
to give children in your family even more? Contributing to a Section 529
college savings plan may allow you to make larger gifts to a child than
direct gifts or gifts made in trust. An individual may contribute $60,000
($120,000 for a married couple) to a child's 529 plan account in a single
year (equal to approximately 5 years' worth of annual exclusion gifts);
provided that no further annual exclusion gifts are made to the child during
the next four years.
The
contribution must be made to a Section 529 account. The beauty of a 529 plan
is that the income accumulates on a tax free basis and both principal and
earnings come out of the plan tax free if used for qualified educational
purposes. Also, as the donor, you may be entitled to a state income tax
deduction for the contribution.
TIP 3:
Payments of Tuition and Medical Expenses
Do you want
to give even more? Payments of tuition and medical expenses made directly to
the provider on behalf of an individual are not considered gifts.
Accordingly, if you would otherwise make gifts to an individual in excess of
the available annual exclusion ($12,000), you should consider paying
outstanding tuition or medical bills on behalf of that individual directly
to the provider.
