In some cases, Georgia residents may want to give loved ones money for their IRAs. They may be concerned that doing so will be a taxable event, however. As long as the amount that is given is under the annual federal gift tax exclusion amount, people do not need to worry about that issue.
The annual IRA contribution limit for people who are under the age of 50 is $5,500. The annual gift tax exclusion amount is $14,000 per year. This means that it is fine to gift up to $14,000 to a loved one without worrying about having to pay more taxes. People may fully fund their loved ones’ IRA annual contribution limits without needing to report that they did to the IRS.
If a person gives more than $14,000 to another person in a year, then the giver will need to report doing so by using Form 709. If a married couple wishes to gift money to another person, they can jointly contribute $28,000. If the recipient is married, then a married couple can give the married couple recipients up to $56,000 in a year without triggering any additional taxes.
People who have questions about gifts they would like to give or gifts that they have been given might want to talk to a tax law attorney. An attorney might advise the client about how to minimize any potential taxes that the person might otherwise be required to pay. Counsel may also help the client with complying with the applicable IRS rules and regulations applicable to these types of transactions.