Although generally any gift is a taxable gift, here are some exceptions:
Gifts that don't exceed the annual exclusion for the calendar year. For 2004, you can give up to $11,000 each to any number of people. This amount doubles, to $22,000 per recipient, in the case of a couple making such a gift.
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Tuition or medical expenses you pay for someone.
Gifts to your spouse.
Gifts to a political organization.
Gifts to qualifying charities, which are tax deductible.
A gift tax return is due on April 15 following the year in which the gift is made. Although a return may be required, no actual gift tax is due until the donor exceeds the lifetime taxable gift exclusion, which is $1 million.
So the parent could do one of two things. Go ahead and split the home sale proceeds among the three adult children, in which case the amount over $11,000 for each would count toward the parent's lifetime taxable gift amount. Or the parent could give each adult child $11,000 this year and the remainder of the money next year. And if the house is the parent's principal residence for the past two out of five years, up to $250,000 ($500,000 for couples who file jointly) in profit is tax-free and won't diminish the amount to be split by the children.
My wife and I have two joint checking accounts, one for monthly expenses and one for irregular expenses. I'm the sole breadwinner, and I finally realized that every time I thought of it as "my" money, I was begrudging it to the woman I promised to love, honor and cherish. She works hard to make a nice home for me and our three children.
You are absolutely right in rethinking the idea that the money you earn is "your" money.
I wish more spouses (both men and women) would have such a revelation. It shouldn't matter who makes all the money or the bulk of the money. When it comes to a marriage, it's a team effort. Think about it like this: In football, only one player can make a winning touchdown, but the entire team can and should claim the victory.
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