Error in the Wiki?

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tadamsmar
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Error in the Wiki?

Post by tadamsmar » Thu Nov 14, 2019 11:37 am

In this wiki page:

https://www.bogleheads.org/wiki/529_plan

I think the whole discussion of the gift tax is confusing, the follow quote is just one example:

"Contribute up to $14,000 annually without triggering any gift tax." True that it does not trigger a gift tax. But a larger contribution does not trigger a gift tax either unless you have already used up your $11,400,000 lifetime gift tax exemption.

This seems more correct:

"Contribute up to $14,000 annually without triggering any reduction in your lifetime gift tax exemption".

Ddd7651
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Re: Error in the Wiki?

Post by Ddd7651 » Thu Nov 14, 2019 11:43 am

I see what you are saying. But it is a true statement. Giving more than 14k does trigger a gift tax.

Now, as a separate issue, while filing proper paperwork, if you give more than that you can deduct your lifetime exemption. That is another topic.

Since "everyone" doesn't do that, many people pay the gift tax and don't fool with the other. It is just another topic basically that is a useful option for some people to investigate. So you aren't "wrong" but the statement is technically "right."

kaneohe
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Re: Error in the Wiki?

Post by kaneohe » Thu Nov 14, 2019 12:29 pm

I spent some time searching that link but couldn't find your quote......probably blind.......but for the 529 plan , in particular, you can contribute more than the annual limit w/o reducing your lifetime exemption. There is a special 529 benefit where you can contribute
up to 5x the annual limit w/o reducing your lifetime exemption. That larger gift is treated as 5 equal gifts for current yr and 4 subsequent ones so as long as you don't violate the annual limit with that condition, you're ok........you do have to file a tax form to declare what you are doing. https://www.savingforcollege.com/articl ... a-529-plan

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heartwood
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Re: Error in the Wiki?

Post by heartwood » Thu Nov 14, 2019 12:36 pm

The annual exclusion amount has been $15000 since 2018..

from the IRS website:
How many annual exclusions are available?
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2014, 2015, 2016 and 2017 is $14,000. For 2018 and 2019, the annual exclusion is $15,000.

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hornet96
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Re: Error in the Wiki?

Post by hornet96 » Thu Nov 14, 2019 12:56 pm

Ddd7651 wrote:
Thu Nov 14, 2019 11:43 am
I see what you are saying. But it is a true statement. Giving more than 14k does trigger a gift tax.
Common misconception. Giving more than $14K (now $15K) triggers the need to file a gift tax return (Form 709), but may not result in any actual gift tax due.

https://turbotax.intuit.com/tax-tips/es ... /L5tGWVC8N
Turbo Tax wrote:If you make a taxable gift (one in excess of the annual exclusion), you must file Form 709: U.S. Gift (and Generation-Skipping Transfer) Tax Return. The return is required even if you don’t actually owe any gift tax because of the $11.400 million lifetime exemption.

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hornet96
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Re: Error in the Wiki?

Post by hornet96 » Thu Nov 14, 2019 12:59 pm

P.S. - I agree with tadamsmar. While the wiki statement is true, it could easily be misinterpreted to think that if you gift $1 over the annual exclusion limit, that you will owe tax on it. That is not necessarily true, due to the lifetime exemption which he correctly points out.

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tadamsmar
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Re: Error in the Wiki?

Post by tadamsmar » Thu Nov 14, 2019 3:32 pm

Ddd7651 wrote:
Thu Nov 14, 2019 11:43 am
I see what you are saying. But it is a true statement. Giving more than 14k does trigger a gift tax.
Your statement "Giving more than 14k does trigger a gift tax" is not a true statement, and it is also not what I quoted.

I quoted that 14k does not trigger the gift tax.

It seems to me you illustrating the fact that it is confusing.

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tadamsmar
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Re: Error in the Wiki?

Post by tadamsmar » Thu Nov 14, 2019 3:40 pm

It might better for it to just say that 529 contributions are treated as gifts under federal law, and there a special 5-year rule. And then correctly state the special 5-year rule. Otherwise, just direct them to the gift tax wiki page. Not bother with giving any of the details of the federal gift tax laws in this wiki, thereby avoiding multiple specifications of complicated and changeable gift tax laws.
Last edited by tadamsmar on Fri Nov 15, 2019 9:10 am, edited 1 time in total.

Ddd7651
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Re: Error in the Wiki?

Post by Ddd7651 » Fri Nov 15, 2019 8:23 am

tadamsmar wrote:
Thu Nov 14, 2019 3:32 pm
Ddd7651 wrote:
Thu Nov 14, 2019 11:43 am
I see what you are saying. But it is a true statement. Giving more than 14k does trigger a gift tax.
Your statement "Giving more than 14k does trigger a gift tax" is not a true statement, and it is also not what I quoted.

I quoted that 14k does not trigger the gift tax.

It seems to me you illustrating the fact that it is confusing.
Where was I quoting you? I made my own summary statement based on the wiki, not you. As others have stated, you don't necessarily pay the tax but it triggers a tax, for which you get an exemption. If anything you helped point out that more information needs to be included or more clarity right after the information in the wiki. I think your post was helpful...

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