Do I have to pay gift tax if I give money to my child?
January 20, 2024 | 50,00 EUR | answered by Eiko Hoffmann
Dear tax advisor,
My name is Jessica Mellert and I am facing the question of whether I have to pay gift tax if I give money to my child. The background is that I would like to financially support my child and give them a larger sum of money. However, I am concerned that this could have tax consequences.
Currently, both my child and I are in a financially stable situation. My child is employed and earns their own income, while I am a retiree with savings that I would like to share. Since it is a larger sum of money that I would like to give to my child, I want to ensure that this is done correctly from a tax perspective and that no unexpected costs arise.
My question to you as an expert in gift tax is therefore: Do I have to pay gift tax if I give money to my child, and if so, how much? Are there ways to avoid or at least minimize gift tax? I would greatly appreciate your expert advice and support in this matter.
Thank you in advance for your help.
Sincerely,
Jessica Mellert
Dear Mrs. Mellert,
Thank you for your inquiry regarding gift tax in relation to the planned monetary gift to your child. As an expert in gift tax, I would be happy to assist you and provide you with relevant information.
Generally, gifts made to your child are subject to gift tax. Gift tax is a tax levied on gifts made without consideration. It is important to note that gifts within the family, such as to children, have a tax-free allowance. Currently, this allowance for children is 400,000 euros within a 10-year period. This means that you can gift your child up to this amount tax-free.
If the amount of your planned gift exceeds this allowance, gift tax will be levied on the excess amount. The amount of gift tax depends on the degree of relationship and the value of the gift. Children typically fall into the most favorable tax class I.
There are various ways to avoid or minimize gift tax. One option is to spread the gift over a period of time so that the allowance can be utilized each year. There are also different allowances and tax classes depending on the degree of relationship that can be used to reduce the tax burden. Additionally, under certain circumstances, gifts can be tax-free, such as when financing education or equipment costs.
It is important to plan a gift carefully and to be informed about the tax implications beforehand to avoid unexpected costs. I recommend seeking individual advice and examining all tax aspects of your planned gift.
I hope that this information has been helpful to you. If you have any further questions or would like a detailed consultation, I am at your disposal.
Yours sincerely,
Eiko Hoffmann
