The Whitehall Ledger - Serving Southern Jefferson County in the Great State of Montana

Extension Office: MSU Extension Suggests a Deposit to an MSA Before the End of the Year

 

December 8, 2021



With the holiday season comes the idea of giving gifts, and, according to Montana State University Extension, gifting an asset can be not only a great opportunity to express love and affection but also an occasion for the gift to become a living legacy. Children and grandchildren could have the opportunity to participate in the management of a family business or they could finance their education using assets gifted from family members. Grandparents and parents can experience satisfaction seeing how the recipients use the monetary gifts.

According to Marsha Goetting, MSU Extension family economics specialist, the types of property that can be living legacies include almost any item with monetary value. Examples include real estate, stocks, bonds, mutual funds, certificates of deposit, U.S. savings bonds, cars or trucks, livestock, and cash.

“Giving away assets may sound simple at first, but federal gift tax laws should be followed to avoid potential problems later,” Goetting said. While Montana does not have a gift tax, the federal government levies one upon transfers of real and/or personal property made during life if the person making the gift does not receive something of similar value in exchange.”

For example, if a father gives his son land with a fair market value of $100,000, the father has made a $100,000 gift. If the father sells the same land to his son for $1,000, he has made a gift of $99,000, the difference between the fair market value and the value received.

“Federal law permits an annual exclusion of up to $15,000 on gifts below which payment of gift tax is not necessary,” said Kaleena Miller, Madison-Jefferson County Extension Agent said. The recipients do not have to be family members and the donor does not have to life a gift tax return for gifts up to $15,000. “The amount will raise to $16,000 in 2022,” added Goetting.

“The gifts can also be used by the recipient to save taxes,” Goetting said. “A grandmother in Billings gifted $15,000 to her adult granddaughter. The granddaughter split up the gift by putting portions in Montana Medical Care Savings Accounts, an IRA and a Montana First Time Home Buyer’s Account. In doing so, the grandmother’s gift saved her granddaughter $1,635 in state and federal income taxes.”

More information about gifting is available in an MSU Extension MontGuide which is online at https://store.msuextension.org/publications/FamilyFinancialManagement/MT199105HR.pdf. For those who do not have computer access, copies are available from the Madison-Jefferson County Extension office at 287-3282.

 

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