How much can you transfer to grandchildren tax free?

For tax year 2009 or 2010 one individual can gift to any other number of individuals up to $13,000 each without any reporting by either party each year.

The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.

If you give any one person gifts in 2009 or 2010that were valued at more than $13,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts each year.

For more information go to www.irs.gov and use the search boxes for publication 950, Introduction to Estate and Gift Taxes, IRS Form 709 United States Gift Tax Return, and Instruction for Form 709.

The instructions are available at the IRS Web site at www.irs.gov choose within Forms and Publications

http://www.irs.gov/pub/irs-pdf/p950.pdf

http://www.irs.gov/pub/irs-pdf/i709.pdf