Perplexed by the Gift Tax? Here Are Answers to 10 Common Questions

Generous gifts can sometimes come with tax consequences, but in general, only very wealthy people need to worry about gift taxes. Still, there could be IRS paperwork involved.

A gift bag is filled with twenty-dollar bills.
(Image credit: Getty Images)

You’ve done well in life, and now you want to share some of your wealth with the people you know and love. Perhaps you want to help your children make a down payment on a home. Or contribute to your grandchild’s college savings plan. Or give a retirement gift to a loyal household employee.

But one concern that might be holding back your generosity is the question of whether you’ll have to pay the federal gift tax. It’s a topic that comes up in all kinds of discussions of giving. But here’s the good news: In general, the only people who have to worry about it are the so-called “one percenters.”

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Joelle Spear, CFP®
Financial Adviser, Partner, Canby Financial Advisors

Joelle Spear, CFP® is a financial adviser and a partner at Canby Financial Advisors in Framingham, Mass. She has an MBA with a finance concentration from Bentley University. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.