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3 Ways to Maximize Tax Benefits When Gifting Thumbnail

3 Ways to Maximize Tax Benefits When Gifting

At the end of 2019, the IRS announced the estate and gift tax limits for 2020 to be $11.58 million per individual, which is up from $11.4 million in 2019. When you’re doing advanced estate planning—making gifts in excess of $15,000 annual exclusion gifts—you’re using your lifetime gift/estate tax exemption1. Below are three ways to transfer wealth and realize maximum tax benefits. 

1. Gifting the Annual Exclusion amount

The simplest way to support others is to gift the annual exclusion amount of $15,000 in cash or other assets each year to as many individuals as you would like. Married couples have the option of combining their annual exclusion to give up to $30,000 to any person tax-free. Annual exclusion gifts are not included in the calculation of gift tax liability so they will not count against the donor’s lifetime gift and estate tax exemptions. 2  

2.  Fund 529 college savings plan

Another option to give to others is by setting up separate 529 accounts for those you wish to benefit. Contributions to these accounts are considered gifts, but money in the accounts grow tax-free and can be withdrawn tax-free. Option of making a five-year accelerated gift utilizing five years’ worth of your annual gift tax exclusion. This allows you to gift up to $75,000 to each beneficiary’s 529 plan today and begin growing those assets tax-deferred and potentially tax-free.

3. Transferring appreciated assets

By transferring appreciated stocks or other assets, you can potentially eliminate capital gains tax liability and enjoy a current year tax deduction. This can be one of the most tax-advantage ways to give and allows you to pay lower taxes and help those you are supporting receive the most amount of money possible4Donor Advised Funds are another option to keep in mind if you are considering giving to charity while keeping tax deductions in mind. 


  1. https://www.forbes.com/sites/ashleaebeling/2019/11/06/irs-announces-higher-estate-and-gift-tax-limits-for-2020/#3d7176832efb
  2. https://www.firstrepublic.com/articles-insights/life-money/plan-your-legacy/gifting-to-family-members-pitfalls-and-benefits
  3. https://www.forbes.com/sites/deborahljacobs/2011/08/22/6-ways-to-give-family-and-friends-financial-aid/#1b501c9b7509
  4. https://www.schwabcharitable.org/public/file/P-10496724

The information contained herein has been obtained from sources deemed reliable but is not guaranteed. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.