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Are contributions to a Vermont Higher Education Investment Plan Account subject to federal gift taxes?


A. Contributions that exceed certain limits may be subject to a federal gift tax. An Account owner may contribute up to $12,000 per year on behalf of a beneficiary without incurring a gift tax. (The annual limit is $24,000 for married couples.) An Account owner who wants to contribute more than $12,000 in a single year may elect to treat contributions up to $60,000 ($120,000 for married couples) per beneficiary as having been made over a five-year period. No tax will be due as long as the owner doesn’t exceed the $60,000 limit during the five-year period. Note that these limits apply to the total of all gifts made by a single owner on behalf of a single beneficiary in a given year. So, if an Account owner contributes to multiple investments on behalf of the same beneficiary, the gift tax may be triggered when total contributions exceed $12,000 for one year or $60,000 for five. Although a gift tax return is required for gifts in excess of the $12,000 annual exclusion, lifetime gift tax

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