Gift splitting

Gift splitting

A technique used to avoid a gift tax in which a large sum of money to be given by two parents to a child is halved and given to the child separately. For example, a husband and wife each donate $10,000 to their child rather than one parent donating $20,000.

Gift Splitting

The act of a married couple giving gifts to a single beneficiary separately in order to avoid the gift tax. Givers of gifts in excess of $10,000 are required to pay the gift tax. In order to avoid this through gift splitting, spouses may separately give up to $10,000, meaning that the beneficiary receives up to $20,000 without subjecting the giver to the tax.
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Gift splitting allows a spouse to increase his or her total annual gift tax exemption by combining both spouses' exemption amount.
Gift Splitting Election--The regulations provide great detail describing how mitigation operates where spouses have elected to gift split under I.
citizenship and the other does not, including marital deduction and gift splitting strategies with particular reference to UK spouses.
David Pratt of Pratt & Bucher, LLP, spoke at the Greater Fort Lauderdale Tax Council meeting; his speech was entitled "The Anatomy of the New Federal Gift Tax Return, Including a Review of the Gift Tax Statute of Limitations, Gift Splitting Provisions and Proposed Regulations Regarding the Election out of the Automatic Allocation of Generation-Skipping Transfer Tax Exemption.
8 TABLE 2 Contrast of the Availability of Wealth Transfer Strategies by Married and Unmarried Couples (4) WEALTH TRANSFER STRATEGY MARRIED UNMARRIED Lifetime Exemption $1 M Unified Tax Credit X X Unlimited Transfer (Marital Deduction) X Annual Exclusion of $11,000 per Recipient X X Gift Splitting X Intestacy Rules Favoring Partner/Spouse X Community Property X Living Trust X X Tax Free Gift of Income Interest to Spouse via QTIP X Unlimited Charitable Deduction X X Charitable Donations Through a CRAT X X Favourable Social Security and Qualified Plan Distributions After Death of Spouse/Partner X
It covers annual gift tax exclusion, exclusion for payment of tuition and medical expenses, gift splitting, and tax return filing requirements.
Gift splitting is only available if both spouses are either citizens or residents of the United States.
Gift splitting allows a married couple to "double" the annual gift tax exclusion amount.
2513(a), gift splitting occurs when "[a] gift made by one spouse to any person other than his spouse.
The spouses may elect gift splitting on a late-filed gift tax return as long as neither spouse has previously filed a gift tax return for that year.
Similarly, gifts made by the transferor's spouse for which gift splitting will be elected are reported in the lower half of Part 1, 2 or 3 of Schedule A.
2036; gift splitting does not make W "transferor" of half of the property for estate tax purposes.