Cshessman: Hi gang, Actually found some newly updated information that we can all take in and absorb;
Gift-tax limits to rise in 2013
Individuals can generally receive up to $13,000 a year as a gift without getting hit by a federal gift tax. In 2013, as a result of cumulative indexing, this amount is projected to increase to $14,000 per person. Parents also may use the technique of "gift splitting," or combining gifts to a child, so that each makes a gift of $13,000 ($14,000 in 2013), which amounts to $26,000 in tax-free gifts ($28,000 in 2013) per year.
In addition to these annual amounts, there are two specific types of exempt, tax-free gifts where there is no limit on how much a person can receive. Folks who make gifts as part of their estate planning should keep these techniques in mind.
IRS Raises Yearly Limit For Tax-Free Gifts
Just in time for the holidays, the Internal Revenue Service announced today that it has raised the yearly limit on how much we can each give another person without having to worry about gift tax. Starting in 2013, the annual exclusion for gifts goes up to $14,000, from $13,000. Spouses can combine their annual exclusions to double the size of the gift.
Read More Link on Right
For example, this year a married couple with a child who is married and has two children could make a joint cash gift of $26,000 to the adult child, the child’s spouse and each grandchild – four people – providing the family with $104,000 a year. Gifts that exceed the limit count against the lifetime exclusion, which this year is $5.12 million ($10.24 million for married couples). http://www.forbes.com/sites/deborahljacobs/2012/10/18/irs-raises-yearly-limit-for-tax-free-gifts/
2013 Annual Gift Exemption Rises to $14,000
The IRS announced today increases to various tax benefits for 2013, including an increase in the annual gift tax exclusion from $13,000, per person to $14,000. http://content.govdelivery.com/bulletins/gd/USIRS-57e79e?reqfrom=share
Use of the annual gift tax exclusion is an important part of many estate plans, as it offers and easy way to transfer money out a client’s taxable estate, while at the same time providing a substantial benefit to families. These gifts can be made outright, or can be made to one of several types of trusts that will either hold the annual gifts for future distribution, or will utilize the annual gifts to purchase large life insurance policies on the life of the client. Then, when the client passes, the life insurance payout provides a large inheritance to the heirs. These types of trusts that utilize the annual gift exemption are often called “Crummey” trusts and/or “ILIT’s” (Irrevocable Life Insurance Trusts) if they are used to purchase the insurance described above. All perfectly legal and commonly used.
With the coming dramatic decreases in the available Estate, Lifetime Gift, and Generation Skipping Tax Exemptions (explained in our Estate Tax planning page:Estate Tax planning), the use of the annual gift exclusion will become an increasingly important tool.
IR-2012-78: In 2013, Various Tax Benefits Increase Due to Inflation Adjustments
Internal Revenue Service (IRS) sent this bulletin at 10/18/2012 11:12 AM EDT
Issue Number: IR-2012-78
In 2013, Various Tax Benefits Increase Due to Inflation Adjustments
WASHINGTON — For tax year 2013, the Internal Revenue Service announced today annual inflation adjustments for more than two dozen tax provisions.
•The annual exclusion for gifts rises to $14,000 for 2013, up from $13,000 for 2012.
•The amount used to reduce the net unearned income reported on a child’s tax return subject to the “kiddie tax,” is $1,000, up from $950 for 2012.
•The foreign earned income exclusion rises to $97,600, up from $95,100 in 2012.
Details on these inflation adjustments and others such as the low-income housing credit, the dollar limits for high-deductible health plans and other amounts can be found in Revenue Procedure 2012-41, which will be published in Internal Revenue Bulletin 2012-45 on
Nov. 5, 2012. http://content.govdelivery.com/bulletins/gd/USIRS-57e79e?reqfrom=share