Generally speaking, the IRS taxes gifts of assets between people unless they happen to be spouses, but only if the gifts exceed the annual gift exclusion. That is the amount anyone can give to any number of people each year. Currently, that annual gift exclusion amount is $14,000. In addition, during your lifetime you also get a separate lifetime gift exclusion amount that applies toward really large gifts. That is your “lifetime gift exclusion.” Note: Any gifts you make in excess of the annual gift exclusion must be reported on a timely IRS Form 709 Gift Tax Return and will reduce the amount of the “estate tax exclusion” available upon your death.
The lifetime gift exclusion increased from $1 million to $5 million in 2010. This was intended to be a temporary law and was set to expire at the end of 2012. Except, of course, the law was renewed. Take a look at the Bloomberg article for more on the hard numbers and bit more of the backstory.
With the 2012 IRS statistics now in, it is clear that taxpayers decided it was time to move and escape a potentially falling tax ceiling. Fortunately, we have another reprieve and a bit more time, with the numbers still working in our favor. Have you been taking advantage of the current laws and putting your plan into action?
Remember: what the IRS gives, the IRS can take away.
