Year-End Gifting Made Easy (2006-2007 Edition)

According to the IRS, the annual gift tax exclusion will stay at $12,000 for 2007.  The gift tax exclusion is the amount that you can give to as many people as you wish, per year, without paying gift tax or even needing to file a gift tax return. 

If you are in a situation where you'd like to make gifts, the end of the year (and the start of the next year) is a good time to do it. Three quick, easy scenarios:

1. You and your spouse have three grown children.  (Each child is married and has one child of his or her own.)  You and your spouse each give $12,000 to each child on December 31, 2006 and $12,000 to each child on January 1, 2007.  You have just given away $144,000 without having to pay gift tax or even file a return.

2. Same facts as in 1., but you also make the same gifts to each child's spouse.  That's another $144,000 that you've given away without having to pay gift tax or even file a return.

3. Same facts as in 2., but you also make the same gifts to your three grandchildren.  That's another $144,000 that you've given away without having to pay gift tax or even file a return.

If you are in a situation where you'd like to make gifts, the end of the year (and the start of the next year) is a good time to do it. Three quick, easy scenarios:

1. You and your spouse have three grown children.  (Each child is married and has one child of his or her own.)  You and your spouse each give $12,000 to each child on December 31, 2006 and $12,000 to each child on January 1, 2007.  You have just given away $144,000 without having to pay gift tax or even file a return.

2. Same facts as in 1., but you also make the same gifts to each child's spouse.  That's another $144,000 that you've given away without having to pay gift tax or even file a return.

3. Same facts as in 2., but you also make the same gifts to your three grandchildren.  That's another $144,000 that you've given away without having to pay gift tax or even file a return.