Question

Under current tax law (2019), how much can a married couple give to their adult son and his wife without incurring a gift tax obligation?

1) $15,000
2) $60,000
3) Unlimited
4) $30,000

Answer 1

Under the 2019 tax laws, a married couple could give their adult son and his wife a combined total of $30,000 without gift tax consequences. The estate and gift taxes are linked by a lifetime exemption amount, which was above $5 million in the referenced years and typically increases over time. The Windsor Supreme Court decision ensured equal federal estate tax rights for same-sex couples. Thus (option 4) is right answer.

Step-by-step explanation:

Under the tax laws in effect for 2019, a married couple could give their adult son and his wife up to $30,000 without incurring a gift tax obligation. This is because each parent could give $15,000 to each person, therefore, the husband could give $15,000 to his son and another $15,000 to his daughter-in-law, and the wife could do the same.

If they exceed this amount, they would have to file a gift tax return, but they might not necessarily owe tax due to the lifetime exemption limit.

The estate tax and gift tax are linked by the unified credit, which effectively allows individuals to give away a certain amount of assets tax-free over their lifetime.

For 2015 and 2013, as mentioned in the references, the estate tax only applied to inheritances over $5.43 million and $5.25 million, respectively.

This amount is typically adjusted for inflation and changes over time.

The United States Supreme Court's decision in United States v. Windsor in 2013 ensured that same-sex married couples have the same federal rights as heterosexual couples concerning the estate tax exemption for surviving spouses. Thus (option 4) is right answer.

Answer 2

A married couple can give up to $60,000 without a gift tax obligation; $30,000 to their adult son and $30,000 to his wife under the 2019 gift tax laws.

Step-by-step explanation:

Under the current tax law as of 2019, a married couple can each give $15,000 to any individual without incurring a gift tax obligation. Thus, a married couple could jointly give up to $30,000 to their adult son and an additional $30,000 to his wife, totaling $60,000, without triggering any gift tax. The individual gift exclusion amount is a way to transfer wealth tax-free, and any amount given above that per person per year may have to be reported to the IRS.