Take a look at what the IRS has to say about the gift tax.Take a look at what the IRS has to say about the gift tax.
New Hampshire is among those states that don`t impose a state gift tax on its residents. Moreover, it is also among those 38 states without any estate taxation.
However, it does not mean that the property you may receive in New Hampshire is entirely tax-free. Once its value exceeds the lifetime exemption limit, which is $11.7 million in 2021, the estate becomes subject to federal estate taxation.
Moreover, being a resident of a gift-tax-free state like New Hampshire also does not liberate you from the federal gift tax due in some instances.
Do New Hampshire residents pay gift tax?
Once you give your property away or sell it at a token price, lend money to anyone interest-free or make an investment, you may be making a taxable gift even if you are a New Hampshire resident.
Federal law provides for the $15,000 gift tax exclusion. It allows you to give away up to $15,000 to as many people as you want every year without filing the Federal Gift Tax Return form and affecting your lifestyle exemption.
Once the gift value exceeds the $15,000 limit, you may either join the efforts with your spouse, doubling your gift tax exclusion or will have to pay the federal gift tax due as the donor.
However, certain gifts go beyond even the federal gift tax exclusion limits:
- Gifts between two spouses who are both US citizens;
- Gifts to IRS-approved charity organizations;
- Payments for medical treatment and education once the money is transferred directly to the institution or organization that provides the service.
In all other cases, it is essential to stay within the annual $15,000 per person frame to stay under the federal gift tax radar.
Why do gift tax principles matter?
You can reduce the part of your estate that becomes subject to the federal inheritance tax, gifting away your property gradually throughout several years.
If you are married and have 3 children, you can give away up to $90,000 of your wealth annually.
Even if you make a gift that exceeds the $15,000 in New Hampshire, and you have to file a gift tax return to report the taxable gift, you still won`t owe any federal gift tax due unless you managed to overcome your lifetime gift exemption limit.
To plan your estate thoroughly and get the most out of New Hampshire gift and estate taxation, it is essential to consider two federal limitations: the $15,000 gift time exclusion and the $11.7 million lifetime gift exemption.
And although considering those numbers, the federal gift and estate taxes apply only to those New Hampshire residents with a particularly sufficient estate, thorough and pre-positioned gift planning helps taxpayers preserve and pass their legacy safely.