I am sure that most people know that you are allowed to give a certain amount of money to beneficiaries tax free. But what some people might not know is what the limits are and what the lifetime limit is, and what the tax implications are for different scenarios. Annually, you can give $12,000 per year per person to as many people as you wish without them having to pay any taxes on the money. If you are married, you and your significant other can EACH give $12,000 per year per individual, so in theory, your rich grandparents could give you $24,000 per year and you would not have to pay taxes on that. Over one’s lifetime, you are allowed to give $1,000,000 tax free, over and above your yearly amount. So, anything you give over $12,000 per year is deducted from that $1,000,000 lifetime amount.
So…if you are someone out there with money that you wish to give away to your beneficiaries, you must follow these guidelines so your gifts are not taxed. Really, its a great way to spread your wealth out over the years without having the tax man take his cut.