Question

John and Joan are married and want to make cash gifts to their children (2), their children's spouses (2), and their grandchildren (4). On December 31, 2018, they gift $15,000 to each child, each spouse of each child, and to each grandchild. How much is subject to gift tax on which tax will actually be paid?

$15,000.00
None of the other choices are correct
$0.00
$240,000.00
$480,000.00

Answer 1

The answer is $0.00 (third option).

Step-by-step explanation:

During the year of 2018, the annual exclusion of both federal and state tax to cash gifts was up to $15,000 per individual. Annual exclusion means that there's up to a certain amount of money that can be gifted without being taxable. In this case, John and Joan's cash gift falls within the limit.

When couples gift money to their family members, the limit is precisely $15,000 per relative, individually; meaning the can gift up to a total of $60,000 without being subject to gift tax.