The government can charge taxes on gifts that are over a certain value, either as a monetary gift or another item of value. Each state sets up its own rules regarding any tax that it collects from its residents for gifts. As of 2013, Connecticut is the only state that has a stand-alone gift tax, but some states charge taxes if a gift is given when a person is contemplating death.
State Gift Tax
Florida does not have a state gift tax as of 2013. Prior to 2005, the state had a state gift tax, but the Economic Growth and Tax Relief Reconciliation Act phased it out. This means that a resident of Florida can give a gift to another person of money, a car or other type of gift of any value without having to pay the state any amount for tax.
Florida Estate Tax
Florida does not impose a tax on the estate of a Florida resident who dies as of 2005. Prior to 2005, Florida had a “pickup tax” that allowed the state to collect a credit from the IRS on the federal estate tax return that it collected from people who filed a federal tax return. Current federal estate tax laws no longer have the government collecting any part of a return that will go to the state for estate tax purposes.
Federal Gift Tax
Just because Florida doesn’t have a state tax, that doesn’t mean that you’re free and clear. You may have to pay a federal tax on a gift. As of 2013, a person can give another person $14,000 without having to pay a federal gift tax. A person can give a gift of this amount to an unlimited number of people without incurring a federal gift tax. The estate tax exemption is $5.12 million as of 2013.
Exceptions to the Gift Tax
If a person wants to give a person more than $14,000, federal tax laws provide some exceptions to make this happen. For example, paying someone’s medical expenses directly to the medical provider or by paying tuition directly to a primary school, secondary school or institution of higher learning does not trigger the gift tax. The gift tax doesn't apply if you're giving a spouse a gift. You can also provide gifts to charities over $14,000 without paying gift tax.
Future Tax Implications
While Florida doesn't have a gift tax, it could add one in the future. However, Florida requires an amendment to the state constitution to change the law regarding gift or estate taxes. Changing a state amendment involves a much more difficult and longer process than simply passing a new law, so if the law does change, you'll likely have plenty of time to make a gift before a new law becomes effective. Consulting a tax attorney may help you avoid any future gift taxes.
- Robert A. Schreiber, P.C.: Estate and Gift Taxes
- Office of the Clerk U.S. House of Representatives: Economic Growth and Tax Relief Reconciliation Act of 2001
- The Coleman Law Firm: Frequently Asked Questions About Estate Taxes
- Florida Probate Litigator.com: Beware of Gift Tax Rules in Florida Estate Planning
- Daszkal Bolton: The IRS Gift Tax Gift: $5M Lifetime Gift-Tax Exclusion
- Research Department Minnesota House of Representatives: Survey of State Estate, Inheritance, and Gift Taxes
- Internal Revenue Service: Publication 950
- Pinnacle Advisory Group: Five Ways You Could Benefit from Becoming a Florida Resident
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