The IRS announced increases to the annual gift exclusion and lifetime estate/gift tax exemptions for 2018. The annual gift exclusion for 2018 is $15,000, up from $14,000 in 2017. You can give $15,000 to as many individuals as you would like without the gift counting towards the lifetime combined estate/gift tax exemption.
It is important to note that there are exceptions to the gift tax:
- Gifts from one spouse to the other spouse,
- Gifts to qualified charities,
- Gifts made directly to a health care provider for medical reasons, and
- Gifts made directly to an educational institution for a student’s tuition.
In the event you make gifts that exceed the annual exclusion, the deadline for filing a gift tax return is April 15 of the year following the year of the gift; however, if you extend your federal income tax filing to October 15, the extension also applies to your gift tax return.
The IRS had also announced that the basic lifetime estate/gift tax exemption amount for the estates of decedents dying during calendar year 2018 would be $5.6 million, up from $5.49 million for calendar year 2017; however, under the new Tax Act that was signed into law on December 22, 2017, the exemption was doubled to $11.2 million per person. For married couples, the combined total is now $22.4 million.
It is important to note that the tax rate on amounts that exceed the exemption amount is 40% and that the $22.4 million per couple is not automatic, it requires an election called “portability” on the estate tax return of the first spouse to die.
It is also important to note that the double estate tax exemption ends at the end of 2025 under the current legislation.
We work with individuals and families to develop plans Estate Plans and Gifting Plans to utilize the available exclusions. For more detailed information and to discuss your specific case, call us today at (678)781-9230 to schedule an appointment.
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