Triggering the Gift Tax
The IRS isn't likely to track a laptop or TV. It can track gifts of stock or those made by check.

I want to give my adult daughter $13,000 as a gift. If I give her the check on January 1, can I buy her lunch later in the month without exceeding the annual gift-tax exemption? Can I buy her a laptop for her birthday or a big-screen TV for Christmas? --A.M., Richmond, Va.
SPECIAL OFFER: 2012 Tax Savings Guide
Technically, all of those gifts count toward the annual limit (which rises from $13,000 to $14,000 in 2013). But you don’t need to worry about paying for lunch.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
“No one actually reports such small things, and they are difficult to trace,” says Karen Goldberg, a CPA and estate-planning attorney with consulting firm EisnerAmper. Nor is the IRS likely to track your gift of a laptop or TV. It can, however, track gifts of stock or those made by check. “If an estate is audited, the IRS typically requests the decedent’s bank and brokerage statements for the three years prior to his or her death,” says Goldberg. “Unreported gifts of stock and gifts made by check can be easily traced this way.”
Keep in mind that people may give up to the limit per person each year to as many people as they like -- doubling the amount for a married couple. It’s highly unlikely that you’d owe tax on a larger gift, either. For 2012, each taxpayer has a credit to cover the gift tax on up to $5.12 million in gifts above the annual exclusion amount. (Any part of the credit used will reduce the amount of the credit available to offset estate taxes on transfers after death.) If you exceed the annual limit, though, you must file a Form 709 with the IRS to keep track of how much of the credit you’ve used up.
401(k) contributions
I’d like to put a large lump sum into my 401(k) outside of my payroll deduction to minimize the tax bite and get closer to contributing the maximum for the year. Can I do that? --A.K., Washington, D.C.
Pretax contributions to your 401(k) must be made through payroll deduction, so you can’t add outside money to boost your tax break. But you may still be able to increase your contributions to get closer to the federal $17,000 maximum for 2012 ($22,500 if you’re 50 or older this year).
Some employers let you contribute a year-end bonus to your 401(k) if you designate the money before the check is paid. And most employers allow plan participants to change the amount earmarked for their 401(k) at any time, which leaves you a small window this year to increase your contribution.
Let your benefits manager know right away if you plan to do this, as the change may take one to two paycheck periods to take effect. And make sure your plan cuts off contributions when you reach the limit.
Medicare open enrollment
What changes will there be to Medicare Part D and Medicare Advantage plans in 2013, and when do I need to decide on a plan? --L.T., Milwaukee
For Part D prescription-drug coverage, the doughnut hole (the gap in coverage during which you must pay more out of pocket) will narrow. In 2013, the discount on brand-name drugs you pay for in the coverage gap will rise from 50% to 52.5%, and the federal subsidy to help pay for generics will rise from 14% to 21%.
As for costs, the average premium for Part D will continue to be about $30 per month. But plans continue to make other changes -- such as boosting co-payments or changing pricing tiers for your medications -- that can result in higher out-of-pocket costs even when the premium remains the same.
Medicare Advantage plans, which cover medical expenses and drugs, may also change coverage and prices, and more are shrinking their networks. Don’t assume your doctors and hospitals will remain in the plan’s network in 2013.
You have from October 15 to December 7 to pick your Part D or Medicare Advantage plan for next year. To explore your options, go to www.medicare.gov/find-a-plan anytime after October 1.
This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine. It might be the best investment you ever make.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
-
Stock Market Today: Have We Seen the Bottom for Stocks?
Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
By David Dittman
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?
Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
By Kelley R. Taylor
-
Ask the Editor: Reader Questions, April 25 — 529 plans
In our latest Ask the Editor round-up, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions related to 529 plans.
By Joy Taylor
-
Ask the Editor: Reader Questions, April 18 — Amended Returns
In our Ask the Editor: Taxes, April 18, round-up — Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on amended returns, mortgages and deductions.
By Joy Taylor
-
How Many IRS Commissioners Have We Gone Through This Year?
IRS Who were the former IRS commissioners, and why did they resign? Find out how IRS turnover can impact your taxes.
By Kate Schubel
-
Tax Day 2025: Don’t Miss These Freebies, Food Deals and Discounts
Tax Day You can score some sweet deals on April 15 in some select restaurants like Burger King, Shake Shack, and more.
By Gabriella Cruz-Martínez
-
Tax Time: Does Your Kid Influencer Owe Taxes?
State Tax Some minors are making big money on social media. Here’s how to know if they need to file taxes.
By Gabriella Cruz-Martínez
-
Ask the Editor: Reader Questions, April 11 — IRAs, RMDs and PTPs.
Ask the Editor: Taxes, April 11, 2025 — Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on Roth IRAs, RMDs and other retirement accounts.
By Joy Taylor
-
Trump Plans to Terminate IRS Direct File program
Tax Filing The IRS Direct File program was piloted last year in 12 states and has since expanded to 25. But will it last under the Trump administration?
By Gabriella Cruz-Martínez
-
Taxpayer Revolt? Why More People Are Avoiding Filing Taxes This Year
Tax Season It may be tempting to skip filing due to the overwhelmed IRS, but doing so could have financial and legal consequences.
By Kelley R. Taylor