The answer to are wedding gifts taxable depends, but you can avoid gift tax using the tips we’ll discuss in this read. You must know about the gift tax, especially with wedding gifts.
We’ve also included an idea for parents who will give their child a wedding gift. And for the general etiquette for presents, you can refer to what is the proper etiquette for a wedding gift.
Are Wedding Gifts Taxable: Everything To Know
Wedding gifts can be taxed as they sometimes cost a large amount, putting them in the taxable gifts category. This is called the gift tax, but if you understand how taxes work, you can follow some tips to avoid it.
What is the gift tax limit?
It’s helpful to know that for 2022, the annual exclusion is $16,000. That being said, you can give a wedding gift up to this amount and not deal with the IRS about it.
Gift tax limit if married
For example, if you are married and you’ll give a wedding gift, remember that you and your spouse are treated as independent individuals when it comes to the gift tax limit. What does this mean?
The gift you’ll receive or donate is independent of your spouse, regardless of whether you file taxes jointly or not. Therefore, you can both give wedding gifts up to $15,000 in one year with the gift from the joint property.
So as a married couple giving wedding gifts, your wedding present per recipient yearly can cost up to $30,000. This makes it easier to send even costly wedding gifts to different couples in a year.
Gift to a married couple
The second way to avoid the gift tax for the wedding gift is to give it to the married couple. It’s possible to donate up to $15,000 per spouse without the risk of exceeding the annual gift tax limit.
Therefore, it’s possible that you and your spouse can send a wedding gift of up to $60,000 to another married couple. This relates to how spouses are treated separately with the annual limit irrespective of the assets combined or shared.
If your child is getting married, you and your husband/wife can use this tip with gifting as a married couple to avoid the gift tax. Regardless, always check with the Internal Revenue Service to always be updated with the annual exclusion.
What gifts are not subject to gift tax?
Any gift is a taxable gift, according to the IRS. However, there are exceptions to this rule, including gifts that are not more than the annual exclusion for the calendar year or $16,000 as of this writing.
Therefore, if your wedding gift is not amounting over $16,000, it’s not a taxable gift. And as for the other non-taxable kinds of gifts, they include those given to your spouse and gifts to qualifying charities, which are deductible from the value of the gift.
Do You Have To Declare Wedding Gifts As Income?
The donor is responsible for the gift tax, but you can arrange for the donee to pay the tax instead. As for deducting gifts on your income tax return, the IRS mentioned that you could not deduct the value of gifts you make.
Making a gift does not also affect your federal income tax. For more information, read Publication 501 for the tax rules regarding filing a federal income tax return.
Are Cash Gifts From A Wedding Taxable?
Your cash wedding gift can be taxed if it’s more than $16,000, following the annual exclusion for the year 2022. Remember that this amount is the total of gifts you’ll give in a year, and exceeding it will require you to file a gift tax return.
But more than knowing the annual gift tax exclusion and gift tax, understand that the former is per recipient. Therefore, you can give $16,000 to one person and the same amount to another person in the same year without needing to file a gift tax return.
How Much Money Can A Married Couple Receive As A Gift Without Being Taxed?
Remember that a married couple can do gift splitting. This way, your gift can be twice the amount that an individual can give, or $32,000 for the 2022 tax year instead of $16,000.
And as for receiving gifts, remember that the donor pays the gift tax. If the donor exceeds the annual gift exemption, the gift is subject to a gift tax.
Are Wedding Gifts From Parents Taxable?
A wedding gift from parents can be taxable if the amount exceeds the annual gift exception. But since you’re giving a wedding gift as a married couple, remember that it can be as much as $32,000.
But of course, parents can be generous, especially when giving their children wedding gifts. Alternatively, you can pay for the wedding instead as your wedding gift.
Are you separated from your partner, and your daughter’s wedding is coming up? Read who pays for a daughter’s wedding when parents are divorced.
Conclusion
Was this read helpful? To answer are wedding gifts taxable, they can be exempted if they don’t go over the gift tax limit.
The limit is $16,000 for the year 2022. You can also give a wedding gift to a married couple, so your gift can cost $32,000 and avoid gift tax.