Calculating gift tax. Barry and his wife Mary have accumulated over $4 million during their 45 years of marriage. They have three children and five grandchildren. How much money can Barry and Mary gift to their children in 2014 without any gift tax liability? How much money can Barry and Mary gift to their grandchildren? What is the total amount of estate removed from Barry and Mary

1. Barry and Mary can gift each of their children $28,000

2. Barry and Mary can gift each of their children $28,000

3. Amount removed = $140,000

Step-by-step explanation:

The total amount per year that can be gifted without reporting to IRS or paying any taxes is $14,000

1. So, each child can get $14,000 from Barry and $14,000 from Mary which totals to $28,000 per child

2. Each grandchild can get $14,000 from Barry and $14,000 from Mary which totals to $28,000 per child.

3. Total amount of estate removed from Barry and Mary = Total gifts to their children and grandchildren

Estate removed = Gift to 2 children + Gift to 3 children

Estate Removed = 2 * $28000 + 3 * $28000

Estate Removed = $56000 + $84000

Estate Removed = $140,000 per year