Simple English definitions for legal terms
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An annual exclusion gift is when someone gives a gift of money, stocks, bonds, or a part of their property to someone else without having to pay taxes on it. The government sets a limit each year on how much can be given tax-free, which is currently $15,000 per person. This type of gift is a way to give to loved ones without worrying about taxes.
An annual exclusion gift is a type of gift that is usually given in the form of cash, stocks, bonds, portions of real estate, or forgiving debt on a family loan. The amount of the gift must not exceed the annual gift tax exclusion set by the federal government. This means that the gift is tax-free and does not require the recipient to pay any taxes on it.
For the year 2021, the annual gift exclusion amount is $15,000 per donor per recipient. This means that a donor can give up to $15,000 to each recipient without having to pay any gift tax. If the donor gives more than $15,000 to a recipient, they will have to pay gift tax on the excess amount.
Examples of annual exclusion gifts include:
These examples illustrate the definition of an annual exclusion gift because they are all gifts that do not exceed the annual gift tax exclusion amount of $15,000. Therefore, they are all tax-free and do not require the recipient to pay any taxes on them.