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$14,000 Gift Checks Deposited After December 31 Will Give You a Holiday Hangover; Charitable Gifts, Not So Much

December 29, 2014 Business & Tax Blog Estate Tax

To conclude the Williams Parker Business & Tax Blog’s inaugural year, a few year-end tax tips:

If you receive a holiday gift check intended to qualify for the donor’s 2014 Federal Gift Tax annual exclusion of up to $14,000 per year, per recipient, improve your chances of repeat future gifts by depositing the check on or before December 31, 2014. If you deposit the check during 2015, the check will not qualify for the donor’s 2014 annual exclusion. That will make your generous donor unhappy because only annual exclusion gifts are “free” for transfer tax purposes. If the gift does not qualify for the annual exclusion, the donor may owe gift tax or have to reduce his or her lifetime exemption, increasing Federal Gift Tax or Federal Estate Tax in the future. More likely, the donor will give you less next year so your total gifts in 2015 fit within the donor’s 2015 annual exclusion.

Charitable gifts are more flexible. Recipient charitable organizations are not required to deposit donation checks on or before December 31, 2014, to qualify for a 2014 income tax deduction. The donor only has to document that the check was mailed or otherwise sent outside the donor’s control on or before December 31, 2014.

We hope you enjoy the holidays and have a happy new year.

E. John Wagner, II