Ive heard that I can get a tax break by giving away up to $13,000 per year per person. How does that work?
The tax break for gifting ONLY applies to estate taxes and not to income tax. It’s common to confuse the two, but there is a big difference. The income tax is assessed every year on your increase while the estate tax is only assessed one time when a person dies. It’s generally based on the fair market value of everything they own at the time of death. Gifting is only one of many tools that we use to reduce the estate tax but again, it will NOT help with your income tax.
