Latest IRS data reveals women giving more generously than men
CHICAGO, September 15, 2008 - Women recently surpassed men as the more prolific givers, according to a review of the latest IRS data by the Grant Thornton LLP National Tax Office.
Gifts from women topped those from men by almost $5 billion in 2005, the last year for which the IRS includes gender information in its publicly available gift tax return data. That's a reversal from the ratio in the IRS's last study of gender in 1997, when men gave $17.6 billion in gifts and women gave only $14.7 billion. The IRS's most recent quarterly statistics of income bulletin shows that in 2005 female donors reported giving $21.7 billion in gifts, while male donors gave just $16.8 billion.
All the IRS data comes from gift tax returns (Form 709), which taxpayers generally must file if they've given any individual more than the yearly gift tax exemption ($11,000 in 2005). Gifts reported on Form 709 are most often made to heirs and are rarely charitable deductions, which the IRS tracks in other ways.
There is some evidence that women may not be exploiting sophisticated tax planning options, such as trusts, as often as men. The data shows that 26 percent of men make their gifts through trusts, while only 22 percent of women do. Conversely, 78 percent of women use the direct gift method, while 74 percent of men do.
"You can only give away $1 million during your life before there are gift tax consequences for giving to non-charitable donees," said Justin Ransome, Grant Thornton's technical practice leader for family wealth planning. "Direct gifts are the simplest way to pass on money, but there are a myriad of established techniques available to reduce the gift tax consequences of a gift."
The IRS data also revealed differences in the kinds of assets given by women and men, with woman giving more gifts that are less often used as part of tax savings techniques. Women were more likely to give cash, as opposed to assets that could appreciate or qualify for valuation discounts. Almost 72 percent of women's gifts came from cash and real estate, compared to only 67.3 percent for men. Men gave a larger percentage of stock and partnerships. Valuation discounts were applied to 16.5 percent of all gifts in 2005 for a total of $3.1 billion.
"Gifts of cash are not necessarily the most efficient way to minimize gift and estate taxes," Ransome said. "It's often better to give assets that are expected to appreciate in the future or interests in a closely held business that will qualify for discounts for lack of control, lack of marketability, or minority interest."
Gifts are currently taxed at a maximum rate of 35 percent. There is a lifetime exemption from gift taxes of up to $1 million, but use of this exemption also counts against the estate tax exemption ($2 million in 2008). Taxpayers are also allowed a yearly gift tax exemption that does not count against the lifetime exemption. It is indexed for inflation in increments of $1,000 and is $12,000 per recipient for 2008. Married couples can usually give each recipient twice that if they choose to split their gifts.
All the IRS data is based on a sample of over 9,000 gift tax returns filed with the IRS in 2006. To access IRS statistical tables on gift tax returns and the most recent statistics of income bulletin, visit the IRS website at http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96464,00.html.
To read more of Grant Thornton's analysis of giving go to www.GrantThornton.com/taxinsights.
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