It is important to review recent changes in the annual gifting limits for several reasons, including the following:1. You may be gifting as part of your estate plan using outdated annual gifting limits.2. You or your spouse may have made gifts that require a federal Gift Tax Return to be filed.
3. Without a clear understanding of the current federal gifting limits, you may miss out on the opportunity to make tax-free gifts by using the full amount of the current exclusion.4. If you are planning to make any gifts to trusts or transfers in trust for any estate planning trusts, you may need to be aware of the 2019 gifting limits.5. If your estate planning documents were prepared prior to the passage of the Tax Cuts and Jobs Act, also known as the TCJA, or prior to the issuance of IRS regulations on the estate, gift, and generation-skipping transfer tax exclusion amounts, your estate plan may need to be updated. Contact your estate planning attorney for a review of your will, trust, life insurance, and any other items in your estate plan that may need revised. Because gifting limits change so frequently, this is an estate planning strategy that requires regular communication with a tax professional and an attorney so you can make changes to your estate plan when necessary to comply with changes in tax laws. Find a Tax Professional.6. If you are settling an estate or trust as an executor or trustee, you may need to be aware of the gift tax exemptions for purposes of filing any tax returns due for the estate or trust. In addition to reviewing the decedent's estate planning documents, you may need to review all accounts, statements, receipts, and other records of the deceased to determine whether any gifts or transfers were made.The annual gift tax exclusion amount in the United States for 2019 is $15,000. The 2019 gifting limits generally apply to federal tax returns filed in 2020 for calendar year 2019.
Have the Gifting Limits for 2019 Increased?
The annual exclusion amount for 2018 was $15,000. In 2019, the annual exclusion amount remains at $15,000. For information on annual gifting limits, gift tax exclusion amounts, and tax rates for prior tax years, go to
gifts and gifting.The annual gifting limits and the estate, gift, and GSTT exemption amounts change frequently as the result of new legislation, IRS regulations, inflation adjustments, etc. Ask your lawyer how your estate plan and gifting strategy may be impacted by future changes in federal tax laws. Some planners may advise you to take advantage of a limited time period when tax exemptions are larger by using certain estate planning methods to increase the amount you can pass to your
heirs and beneficiaries. Your attorney can also explain commonly used strategies to structure gifts and transfers when you do not know what tax rates will be in effect when your estate or trust is administered.However, you may find that based on the size of your estate, federal estate taxes and gift taxes are not a concern because the current exemption amounts are so high. A quick way to gain peace of mind is to consult a professional about your unique circumstances and objectives.All gifting limits and gift tax exclusion amounts listed in this article apply to federal taxes in the United States. This article does not discuss any state taxes that may apply to any individual or estate.
2019 Gifting Amounts and Exclusions
These are the key numbers to know regarding 2019 gifting limits for purposes of estate planning:The gift tax exclusion amount for 2019 is $11,400,000 for an individual. For purposes of federal tax law, this gift tax exclusion amount is also sometimes referred to as the basic exclusion amount or BEA. This exclusion amount applies to a decedent that passes during the 2019 tax year.The combined gift tax exclusion amount for a married couple in 2019 is $22,800,000.The 2019 annual exclusion for gifts is $15,000. Using gift splitting, married couples can gift $30,000 to any person or donee.If one of your estate planning objectives is to minimize federal taxes, you may want to use the full amount of your gift tax exclusion. You may not be motivated to make an estate plan at this time and you may be hesitant to complete a gift you are likely to make in the future. Nevertheless, the gift tax exemption amounts currently available are not permanent. The exemption amounts in place right now provide an opportunity to take advantage of exclusion amounts that could be much lower just a few years from now. For example, we know that in the year 2026, federal gift tax exclusion amounts in the U.S. are set to be quite a bit lower based on today's tax laws, such as the TCJA. Only a tax professional or attorney can advise on the impact these laws and regulations may have on your estate.If you will be making a gift or transfer in 2020, review the 2020 Gifting Limits and consult your tax advisor or estate planning lawyer for information on the specific exemption amounts and gifting limits applicable for the tax year in which the gift or transfer will occur.
How Much Can a Married Couple Gift in 2019?
If you are married, it is a good idea to discuss any proposed gifts with your spouse. If you want to make the maximum amount of gifts allowable under the annual gift tax exclusion, ask your tax professional about gift splitting. If you utilize this tax method, you can gift up to $30,000 as a married couple to any person or donee in 2019. If you and your spouse make gifts that exceed the exclusion amount for a particular year, be sure to consult a tax preparer about filing a gift tax return.
Important Steps to Take Before Gifting
The following is a list of prudent steps to take regarding gifting in the U.S.:1. Whether you are making gifts as part of an estate planning strategy or gifting for any other reason, be sure to provide your tax preparer with all necessary information about the gifts. This may include the amount of the gift, the date of the transfer, the recipient, the purpose of the gift, and the type of property gifted. In addition, your accountant or CPA may need copies of all gift tax returns you filed in the past and information on gifts you made that were not reported on a tax return.2. Keep detailed records of all gifts or transfers. This includes maintaining records such as financial statements, account statements, receipts, copies of canceled checks, trade confirmations, property tax statements, invoices, and any other documentation that may be needed to determine the amount, value or date of gift.3. Before making a substantial gift or transfer of property, consult an attorney about when to make the gift, the best way to transfer the asset, and any tax changes that may impact your gifting strategy at that time. The best method of making the gift may be different depending on whether it is a lump sum gift you plan to make one time or several smaller gifts you plan to make over several years. Also, carefully consider whether you want to give up control of the property you plan to gift. A lawyer can advise on how to structure your gifting as part of a comprehensive estate plan.4. If you are going to pay expenses for another person during 2019 or 2020, such as educational, medical, long-term care or other expenses, consult your tax professional about any tax issues you should consider with regard to such payments.5. Ask your tax preparer whether you need to file a gift tax return for 2019 or any prior tax year. To find the current version of federal gift tax forms and instructions, IRS notices, and related information, visit the IRS website.Published November 30, 2018. Updated November 18, 2019.Copyright 2020 Pennyborn.com. ALL RIGHTS RESERVED.
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