The amount you can give anyone without having to file a gift tax return in 2015 remains the same as 2014 at $14,000.
Remember that you can give your children, their spouses, your grandkids $14,000 each. In addition, if you are married, your spouse can also gift $14,000 to each person.
Generally, families use gifting to reduce the size of their estate do not need Medicaid long-term care coverage, but if you or your spouse need care and you have gifted money in the past, it may affect your ability to obtain coverage.
The $14,000 figure is the amount of the current gift tax exclusion (for 2014 and 2015), meaning that any person who gives away $14,000 or less to any one individual does not have to report the gift to the IRS, and you can give this amount to as many people as you like. If you give away more than $14,000 to any one person (other than your spouse), you will have to file a gift tax return. Filing a gift tax return does not mean you will have to pay a gift tax. Taxes are only when your reportable gifts total more than $5.43 million (2015 figure) during your lifetime.
Many people incorrectly believe that if they give away an amount equal to the current $14,000 annual gift tax exclusion, this gift will be exempt from Medicaid’s five-year look-back at transfers that could trigger a waiting period for benefits.
The gift tax exclusion is an IRS rule, and this IRS rule has nothing to do with Medicaid’s asset transfer rules. While the $14,000 that you gave to your grandchild this year will be exempt from any gift tax, Medicaid will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time should you apply for them within the next five years.
If you think there is a chance you will need Medicaid coverage of long-term care in the foreseeable future, see your Jacksonville elder law attorney before starting a gifting plan.