Gift Tax
Can you cancel out gift tax? For example, if I give someone $20,000 which is over the limit, can they later on in same year gift me say $8,000? That would be a net gift of $12,000. Does that cancel out and allow you to fall below the annual gift limit for that year? And therefore avoid reporting to IRS.
Terry Says
First of all, for smaller amounts above the exemption limit (currently $18,000 a year) you don’t have to file a gift tax report. It is doubtful that your total “estate” will grow to more than the current estate tax exemption limit of $13.6 million (current). So I wouldn’t really worry about the slight overpayment. And if you are married and filing a joint return, you have a total exemption of $36,000!
But to answer your question specifically if the recipient does return $2,000 (the excess) you could legally consider yourself under the limit!
