Legal Question in Wills and Trusts in New Jersey

Re: $12,000 gift to children per year

No NJ or federal gift tax is payable on gifts of up to $12,000 per year, per donee (married couples can give a combined $24,000). Niether party (donor or donee) is required to file any forms if the gift is under the amount noted. If the gift is more than $12,000, the donor should file a gift tax return (IRS Form 709).

Re: $12,000 gift to children per year

Annual gifts, now $12,000 per donee, are neither income to the recipient nor tax deductible by the grantor, depending on what they consist of. For example, gifts of stock on which dividends have been declared but not yet paid, make the recipient responsible to report the dividend and pay taxes on it. If the gift consists of income distributed from a discretionary trust, it become taxable to the recipient. If the gift is merely cash from a checking or savings account, there are no tax consequences. Annual gifts need not be reported on a gift tax return, unless the gift is of stock (where there may be future issues of value, such as if the gift is of stock in a non-public corporation or a private partnership, and cost basis to determine ultimate reporting of gain/loss when sold).